UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
ELMO SHROPSHIRE, INDIVIDUALLY AND AS A MEMBER OF "ELMO & PATSY"; ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, 06 Civ. 3252 (GBD) (KNF)
Plaintiff, ECF CASE
-against-
SONY MUSIC ENTERTAINMENT, A Delaware General Partnership,
Defendant
STIPULATION AND AGREEMENT OF SETTLEMENT
Elmo Shropshire ("Plaintiff'), on behalf of himself and the Class (as defined below), and
defendant Sony Music Entertainment ("Defendant" or "SME"), by and through their attorneys,
hereby stipulate to the dismissal of the claims asserted by Plaintiff and the Class against
Defendant, upon and subject to the terms and conditions of this Stipulation and Agreement of
Settlement (the "Stipulation") set forth below, as of March 6, 2012 subject to the approval of the
Court pursuant to Rule 23 of the Federal Rules of Civil Procedure.
RECITALS
WHEREAS, the above-captioned action (the "Action") was brought as a class action on
behalf of a class of persons who entered into recording or production agreements with labels
affiliated with, or subsidiaries of, SME, and alleged breach of those recording agreements with
respect to the calculation of royalties on permanent digital downloads and ringtones; and
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WHEREAS, on April 27, 2006, plaintiffs Gregg Allman, Jaimoe f/k/a Johnny Lee
Johnson and Butch Trucks, individually, as members of "The Allman Brothers Band," and as
partners in "The Allman Brothers Band Recording Company' ; and, Rick Nielsen, Brad Carlson
p/k/a "Bun E. Carlos", Robin Zander, and Torn Petersson, individually, and as members of
"Cheap Trick"; Elmo Shropshire, individually, and as a member of "Elmo & Patsy" filed the
initial putative class action complaint against Sony BMG Music Entertainment in the US.
District Court for the Southern District of New York (the "Court") asserting causes of action for
breach of contract and declaratory judgment; and
WHEREAS on July 10, 2006, Plaintiffs filed a First Amended Complaint alleging the
same causes of action; and
WHEREAS, on September 11, 2006, SME moved to dismiss the Amended Complaint
pursuant to FRCP 12(b)(6); and
WHEREAS, on June 17, 2008, the Court granted SME's Motion to Dismiss; and
WHEREAS, on June 24, 2008, the Clerk of the Court entered Judgment against
Plaintiffs; and
WHEREAS, on June 30, 2008, Plaintiffs filed a Motion for Reconsideration of the
Court's Order granting SME's Motion to Dismiss, Relief from the Judgment and Leave to
Amend; and
WHEREAS, on August 22, 2008, the Court signed a Stipulation and Order of Voluntary
Dismissal with Prejudice of plaintiffs Rick Nielsen, Brad Carlson p/k/a "Bun E. Carlos", Robin
Zander, and Torn Petersson, individually, and as members of "Cheap Trick"; and
WHEREAS, on March 19, 2009 the Court entered an Order vacating the judgment of
dismissal and granting Plaintiffs an opportunity to file a Second Amended Complaint; and
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WHEREAS, on March 23, 2009, Plaintiffs filed the Second Amended Complaint which
asserted causes of action for breach of contract, declaratory judgment and otherwise clarified the
pleadings; and
WHEREAS, on April 14, 2009, the Court signed a Stipulation and Order of Partial
Dismissal with Prejudice dismissing the causes of action for declaratory judgment; and
WHEREAS, on April 20, 2009, SME filed its Answer to the Second Amended
Complaint; and
WHEREAS, on May 19, 2009, Magistrate Fox issued a pretrial order which inter alia
bifurcated discovery such that merits discovery be completed before class certification discovery
would commence; and
WHEREAS, on April 16, 2010, Plaintiffs filed the Third Amended Complaint adding the
Aliman Brothers Band Recording Company as a plaintiff; and
WHEREAS, on May 7, 2010, SME filed its Answer to the Third Amended Complaint;
and
WHEREAS, on May 6, 2010 and May 21, 2010, the parties attended mediation sessions
in New York conducted by Eric Van Loon of JAMS and subsequently participated in mediation
sessions by teleconference with Mr. Van Loon on numerous additional occasions; and
WHEREAS, on July 13, 2010 the Parties attended a settlement conference conducted by
Magistrate Fox; and
WHEREAS, on September 15, 2010, the Court signed a Stipulation and Order of
Voluntary Dismissal with Prejudice of plaintiffs Allman Brothers Band Recording Company;
Gregg Allman, Jaimoe f/k/a Johnny Lee Johnson and Butch Trucks, individually, as members of
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"The Allman Brothers Band," and as partners in "The Allman Brothers Band Recording
Company"; and
WHEREAS, on September 20, 2010, Plaintiff Elmo Shropshire filed a Motion for Partial
Summary Judgment; and
WHEREAS, on January 14, 2011, SME filed a Motion for Summary Judgment; and
WHEREAS, in early March 2011, the parties attended a mediation session in New York
conducted by Eric Van Loon of JAMS; and
WHEREAS, on March 11, 2011 the parties submitted a letter to, and endorsed by,
Magistrate Fox advising the court that the parties had reached a settlement in principle and
requesting an order adjourning all deadlines; and
WHEREAS, the parties participated in mediation sessions by teleconference with Mr.
Van Loon on numerous occasions between March and August, 2011; and
WHEREAS, on August 10 and 11, 2011, the Parties attended mediation sessions in New
York conducted by Eric Van Loon of JAMS during which the parties agreed to a settlement term
sheet; and
WHEREAS, Class Counsel (as defined below) have conducted a thorough investigation
of the underlying events and transactions as alleged in the Third Amended Complaint, including
a review of documents produced by SME, interrogatory responses provided by SME,
depositions, witness interviews, and confirmatory discovery provided by SME pursuant to the
settlement term sheet, and have researched the applicable law with respect to the claims alleged
and the potential defenses thereto; and
WHEREAS, SME denies, all allegations of wrongdoing, fault, or liability or that it has
acted improperly in any way; believes that the complaint and amended complaints in this Action
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lack merit; would have continued to resist vigorously Plaintiff's claims and contentions and
would have continued to assert its defenses thereto had this Stipulation not been reached; and has
entered into this Stipulation to put the Released Plaintiff Claims to rest finally and forever solely
for the purpose of avoiding prolonged and expensive litigation, without acknowledging in any
way any fault, wrongdoing or liability whatsoever; and
WHEREAS, Plaintiff and Class Counsel believe that the breach of contract and
declaratory judgment claims asserted in the Action are meritorious and that the evidence
developed to date supports the claims asserted, but they have considered and weighed the issues
involved in establishing the validity of their claims and have concluded that, in light of the
uncertainty of the outcome as well as the substantial risks and inevitable delay in proceeding to
trial, compared to the benefits being provided hereby, the terms and conditions set forth herein
are fair and reasonable and should be submitted to the Court for approval.
NOW THEREFORE, without any admission or concession on the part of Plaintiff of
any lack of merit of the Action whatsoever, and without any admission or concession of any
liability or wrongdoing or lack of merit in the defenses whatsoever by Defendant, IT IS
HEREBY STIPULATED AND AGREED, by and among the parties to this Stipulation,
through their respective attorneys, subject to approval of the Court pursuant to Rule 23(e) of the
Federal Rules of Civil Procedure, in consideration of the benefits flowing to the parties hereto
from the Settlement, that all Released Plaintiff Claims (as defined below) as against the Released
Parties (as defined below) and all Released Defendant Claims (as defined below) shall be
compromised, settled, released and dismissed with prejudice and without costs, upon and subject
to the following terms and conditions:
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CERTAIN DEFINITIONS
1. As used in this Stipulation, the following capitalized terms (not already defined
above or as may be defined below) shall have the following meanings:
(a) "Authorized Past Claimant" means a Class Member on behalf of whom a
timely, valid Claim Form for Past Settlement Relief has been submitted.
(b) "Authorized Future Claimant" means a Class Member (i) who is party to
a Class Contract, at least 28,500 total downloads of recordings attributable to which Class
Contract have been sold in the United States by SME on Apple's iTunes Store from inception
through December 31, 2010, and (ii) on behalf of whom a timely, valid Claim Form for
Prospective Settlement Relief has been submitted in connection with such Class Contract.
(c) "Claim Form" means the form to be sent to potential Class Members
substantially in the form attached hereto as Exhibit A-2
(d) "Class Members" means a person or entity that falls within the definition
of the Settlement Class.
(e) "Class Counsel" means the law firms of Caplan & Ross, LLP, Milberg
LLP, and Probstein, Weiner & Butler.
(f) "Class Contract" means a contract dated between January 11976 and
December 31, 2001 (the "Class Period") that (i) was entered into with CBS Records or Sony
Music Entertainment, including their unincorporated divisions and business units, their United
States subsidiaries as of July 2004, and any predecessor in interest to any of them; (ii) is
currently held by Sony Music Entertainment, including its unincorporated divisions and
business units and United States subsidiaries; (iii) contains a clause providing that SME will
pay to such Class Member 50% of SME's net receipts in respect of any Master Recording
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leased or licensed by SME to a third party (a "Net Receipts Provision"); (iv) does not contain a
clause capping the amount to be paid under the Net Receipts Provision, such as a clause limiting
payments under the Net Receipts Provision to the amount that would be paid under another
royalty provision contained in the contract; (v) does not contain an express rate for digital
exploitations other than a so-called "Audiophile" or "New Technology" provision; and (vi) was
not modified to include an express rate for digital exploitations or to make any change to the
Net Receipts Provision.
(g) "Class Period" means the period beginning and including January 1, 1976
through and including December 31, 2001.
(h) "Defendant's Counsel" means the law firm of Covington & Burling LLP.
(i) "Effective Date of Settlement" or "Effective Date" means the date upon
which the Settlement contemplated by this Stipulation shall become effective, as set forth in
paragraph 25 below.
(j) "Judgment" means the proposed Order and Final Judgment substantially
in the form attached hereto as Exhibit B.
(k) "Notice" means the Notice of Pendency of Class Actions, Proposed
Settlements of Class Actions, Motions for Attorneys' Fees and Expenses, and Settlement
Hearings, which is to be sent to Class Members substantially in the form attached hereto as
Exhibit A-1.
(1) "Notice Order" means the order substantially in the form attached hereto
as Exhibit A, to be entered by the Court, inter alia, preliminarily approving the terms and
conditions of this Stipulation, directing that Notice be provided to the Settlement Class, and
scheduling a hearing concerning final approval of the Settlement.
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(m) "Past Settlement Relief' means the agreement by Defendant to pay or
credit royalties on past U.S. permanent digital downloads and ringtones to the royalty accounts
of Authorized Past Claimants as described in paragraph 8(a) below.
(n) "Prospective Settlement Relief' means the agreement by Defendant to
calculate royalties on future U.S. permanent digital downloads and ringtones to the royalty
accounts of Authorized Future Claimants as described in paragraph 8(b) below.
(o) "Publication Notice" means the summary notice of proposed Settlement
and hearing for publication substantially in the form attached hereto as Exhibit A-3.
(p) "Released Defendant Claims" means any and all actions, suits, claims,
demands, rights, liabilities and causes of action, of every nature and description whatsoever,
whether individual, class, representative, legal, equitable, or any other type or in any other
capacity, or concealed or hidden, that were asserted or that could have been asserted (including
without limitation claims for negligence, gross negligence, breach of contract, breach of duty of
care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state
or federal common law, statutes, rules, or regulations), including both known claims and
Unknown Claims, that the Defendant or any of the other Released Parties in the past had, now
has, or might in the future have against the Plaintiff, any of the other Class Members, or their
attorneys, arising from the institution, prosecution, or settlement of the Action; provided,
however, that the definition of Released Defendant Claims shall not in any way impair or
restrict anyone's rights to enforce the terms of the Settlement.
(q) "Released Plaintiff Claims" shall collectively mean any and all actions,
suits, claims, demands, rights, liabilities and causes of action, of every nature and description
whatsoever, whether individual, class, derivative, representative, legal, equitableor any other
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type or in any other capacity, or concealed or hidden, that were asserted or that could have been
asserted (including without limitation claims for negligence, gross negligencebreach of
contract, breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary duty,
or violations of any state or federal common law, statutes, rules, or regulations), including both
known claims and Unknown Claims, that the Plaintiff, the Settlement Class, any Class Member
or any of them in the past had, now has, or might in the future have against the Released Parties
or any of them on the basis of, connected with, or in any way arising out of any allegation that
any past, present, or future Sales in the United States of permanent digital downloads or
ringtones of sound recordings owned by SME (including its unincorporated divisions and
business units) or its subsidiaries involves a lease or license of such sound recordings for
purposes of calculating royalties or other payments to any Class Member, or that SME
otherwise should calculate royalties on Sales in the United States of permanent digital
downloads or ringtones of recordings attributable to Class Contracts under royalty provisions
other than those that it currently applies to such Sales; provided, however, that the definition of
Released Plaintiff Claims shall not in any way impair or restrict the rights to enforce the terms
of the Settlement. Except as expressly provided in paragraph 16(b) herein, nothing herein shall
be deemed to terminate, modify or cancel any provision of any Class Contract, each of which
shall otherwise continue in full force and effect in accordance with its terms. The release of the
"Released Plaintiff Claims" pursuant to this Settlement is without prejudice to any other rights
or audit rights not involving those claims.
(r) "Released Parties" means Defendant, including its unincorporated
divisions and business units, and any of its past, present, or future parent entities, associates,
affiliates, or subsidiaries and each and all of their past, present and future officers, directors,
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stockholders, principals, employees, advisors, agents, attorneysfinancial or investment
advisers, consultants, lenders, insurers, investment bankers, commercial bankers,
representatives, affiliates, associates, parents, subsidiaries, joint ventures, general and limited
partners and partnerships, heirs, executors, trustees, personal representatives, estates,
administrators, trusts, predecessors, successors and assigns.
(s) "Request for Exclusion" means a written request to be excluded from the
Settlement Class submitted by a member of the Settlement Class in such form, in such manner,
and within the time limitation as set forth in the Notice.
(t) "Sales" means any distribution in the United States of permanent digital
downloads or ringtones, whether by sale, license, or otherwiseexcluding, for the avoidance of
doubt, uses of sound recordings attributable to Class Contracts in motion pictures, television,
advertising, or other uses for which SME currently accounts under such Class Contracts' Net
Receipts Provisions.
(u) "Settlement" means the settlement contemplated by this Stipulation.
(v) "Settlement Class" means the settlement class set forth in paragraph 2
below.
(w) "Settlement Hearing" means the final settlement hearing held to
determine, among other things, the fairness, reasonableness, and adequacy of the Settlement.
(x) "Unknown Claims" means any and all Released Plaintiff Claims that the
Plaintiff, the Settlement Class, or any of the Class Members do not know of or suspect to exist
in their favor at the time of the release of the Released Parties and any and all Released
Defendant Claims that Defendant or any of the other Released Parties do not know of or suspect
to exist in their favor at the time of the release of Plaintiff and the Class Members, which, if
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known by them, might have affected their agreement to the Settlement. With respect to
Unknown Claims, Plaintiff and each Class Member and Defendant and Released Party shall be
deemed to have, and by operation of the Judgment shall have, hereby expressly waive and
relinquish, to the fullest extent permitted by law, the benefits of Section 1542 of the California
Civil Code, which states:
A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.
Plaintiff and Defendant acknowledge, and Class Members and Released Parties by operation of
law shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in the
definition of Released Plaintiff Claims and Released Defendant Claims was separately bargained
for and a key element of the settlement of which this release is a part.
SETTLEMENT CLASS
2. Plaintiff shall request that the Court enter a certification order and certify for
settlement purposes only the following Settlement Class: All recording artists and producers
who (a) are parties to a Class Contract and (b) did not provide SME with a release of claims
relating to payment of royalties on downloads or ringtones covering the entire period from
January 1, 2004 through December 31, 2010. Subject to paragraph 5 herein, Defendant shall not
oppose such certification.
3. Excluded from the Settlement Class are the Defendant and any persontrust, firm,
corporation, or other entity affiliated with or related to the Defendant.
4. Also excluded from the Settlement Class are any persons or entities who exclude
themselves by filing a timely Request for Exclusion in accordance with the requirements set
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forth in the Notice, as defined herein. As to each Class Contract, Requests for Exclusion shall be
valid only if submitted on behalf of all Class Members who are parties to such Class Contract.
OBLIGATIONS OF PARTIES IN FURTHERANCE OF SETTLEMENT
5. As soon as practicable, Plaintiff shall move the Court for entry of the Notice
Order. Defendant agrees, solely for purposes of effectuating the Settlement, not to oppose
certification of the Settlement Class pursuant to Rule 23 of the Federal Rules of Civil Procedure.
Defendant does not waive and expressly reserves the right to contest class action treatment of
Plaintiff's claims if the Effective Date fails to occur for any reason, including without limitation
any possible termination of this Settlement. If the Effective Date fails to occur for any reason, (i)
the certification of the Settlement Class shall be deemed null and void, and each Party shall
retain all of their respective rights as they existed prior to execution of this Settlement
Agreement, (ii) any findings or stipulations regarding certification of the Settlement Class will be
automatically vacated upon notice to the Court of this Stipulation's termination or disapproval
and the Action may proceed as though no final certification of the Settlement Class had occurred,
(iii) Plaintiff shall not raise or rely upon any such findingsstipulations, or certification in
connection with any subsequent request for class certification, and (iv) neither this Settlement
Agreement, nor any of its accompanying exhibits or any orders entered by the Court in
connection with this Settlement Agreement, shall be admissible or used for any purpose.
6. The obligations incurred pursuant to this Stipulation shall be in full and final
disposition of the Action with prejudice, including (a) any and all Released Plaintiff Claims as
against all Released Parties and (b) any and all Released Defendant Claims as against the
Plaintiff, any of the other Class Members, or their attorneys.
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(a) Upon the Effective Date, the Plaintiff, the Settlement Class, and each
Class Member on behalf of themselves, their heirs, executors, administrators, attorneys,
successors and assigns, and any persons they represent, shall be deemed to have, and by
operation of the Judgment shall have, fully, finally and forever released, relinquished, and
discharged the Released Parties with respect to each and every Released Plaintiff Claim and
shall forever be enjoined from prosecuting any of the Released Plaintiff Claims with respect to
each and every Released Party and covenant not to sue any of the Released Parties with respect
to any of the Released Plaintiff Claims.
(b) Upon the Effective Date, Defendant and each of the other Released
Parties on behalf of themselves, their heirs, executors, administrators, attorneys, successors and
assigns, and any persons they represent, shall be deemed to have, and by operation of the
Judgment shall have, fully, finally and forever released, relinquished, and discharged the
Plaintiff, any of the other Class Members, or their attorneys with respect to each and every
Released Defendant Claim and shall forever be enjoined from prosecuting the Plaintiff, any of
the other Class Members, or their attorneys with respect to each and every Released Defendant
Claim.
(c) In the event that, notwithstanding the provisions of paragraphs 6(a) and
(b) hereof, any of the Released Parties asserts against Plaintiff, any other Class Member or
Class Counsel, any claim that is a Released Defendant Claim, then Plaintiff, such Class Member
or Class Counsel shall be entitled to use and assert such factual matters included within the
Released Plaintiff Claims against such Released Party only in defense of such claim but not for
the purposes of affirmatively asserting any claim against any Released Party.
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(d) In the event that, notwithstanding the provisions of paragraphs 6(a) and
(b) hereof, Plaintiff, any other Class Member or Class Counsel asserts against any Released
Parties any Released Plaintiff Claims, such Released Parties or their respective counsel shall be
entitled to use and assert such factual matters included within the Released Defendant Claims
against such claimant only in defense of such claim but not for the purposes of affirmatively
asserting any claim against any such claimant.
7. The parties to this Stipulation agree to the entry of Judgment, dismissing the
Action with prejudice and without costs, and providing for the releases above.
SETTLEMENT CONSIDERATION
8. Subject to the other provisions of this Agreement, and subject to Court approval,
Defendant agrees that it will cause the settlement consideration described below to be paid or
credited, as applicable, to the royalty accounts of Authorized Past Claimants and Authorized
Future Claimants as specified in the provisions of paragraph 16 hereof in exchange for the
releases described in paragraph 6.
(a) Past Settlement Relief: For past Sales in the United States of permanent
digital downloads and ringtones:
(1) $4,196,790, less attorneys' fees and expenses as approved by the
Court, to be paid or credited, as set forth in paragraph 16(a)(1), to the royalty accounts of
Authorized Past Claimants with at least 28,500 total downloads of recordings attributable to
Class Contracts and sold in the United States by SME on Apple's iTunes Store from inception
through December 31, 2010.
(2) $164,580 cash to be paid, as set forth in paragraph 16(a)(2), to
Authorized Past Claimants with fewer than 28,500 total downloads of recordings attributable to
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Class Contracts and sold in the United States by SME on Apple's iTunes Store from inception
through December 31, 2010.
(b) Prospective Settlement Relief: SME shall calculate royalties on Sales in
the United States of permanent digital downloads and ringtones under the royalty provisions
that it currently applies to such Sales, but shall pay an "Additional Royalty," as set forth in
paragraph 16(b)(1) below, in connection with the Sales of U.S. permanent digital downloads
and ringtones as set forth in paragraphs 16(b)(1) and (2) below.
9. Defendant acknowledges and agrees that this Stipulation will not impact upon or
affect in any way whatsoever the other audit rights contained in the Class Contract of any Class
Member, except that no Class Member may audit Defendant with regard to any Released
Plaintiff Claim.
NOTICE TO CLASS MEMBERS
10. Provided that that the Court has preliminarily approved the Settlement and
entered the Notice Order no later than March 15, 2012, SME will mail the Notice and the Claim
Form to each royalty recipient with the royalty account statement issued to such royalty recipient
for the period ended December 31, 2011, except that SME will separately mail the Notice and
the Claim Form no later than April 6, 2012 to those royalty recipients whose royalty account
statements for such period were mailed prior to March 15, 2012. In the event that the Court does
not preliminary approve the Settlement and enter the Notice Order by March 15, 2012, SME will
mail the Notice and the Claim Form to each royalty recipient with the next royalty account
statement issued to such royalty recipient following entry of the Notice Order by the Court,
provided that such preliminary approval is received at least 15 days prior to mailing of the next
royalty account statement.
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11. (a) Potential Class Members may submit a Claim Form to SME, substantially
in the form attached hereto as Exhibit A-2, within the later of 90 days of the mailing of Notice or
45 days from such Class Members' receipt of contracts from SME pursuant to a timely request
for copies of such contracts as provided for in the Claim Form. SME shall maintain a web site in
connection with the Settlement, which will prominently display a link through which potential
Class Members may submit such request for copies of contracts and may indicate whether they
wish to be contacted by Class Counsel. SME will provide to Class Counsel the names and
contact information of persons who indicate that they wish to be contacted by Class Counsel.
(b) Class Members with at least 28,500 total downloads of recordings
attributable to Class Contracts and sold in the United States by SME on Apple's iTunes Store
from inception through December 31, 2010 who fail to submit a Claim Form within the time
specified in paragraph 11(a) above may submit a Claim Form solely for Prospective Settlement
Relief within two years of the initial mailing of the Notice. SME shall include a single-page,
short-form notice of the deadline for submission of such Claim Forms with each of the three
royalty account statements issued following the initial Notice.
12. SME, at its own expense, will cause the Publication Notice, substantially in the
form attached hereto as Exhibit A-3, to appear in Billboard magazine approximately 30 days
after the initial mailing of the Notice and Claim Form. The Publication Notice will be one-
quarter page in size.
13. SME will bear its own notice and administration costs, including without
limitation SME's costs and expenses associated with identifying members of the Settlement
Class and effecting mail Notice and Publication Notice to the Settlement Class, and the
administration of the Settlement, including without limitation, the actual costs of printing and
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mailing the Notice and the Claim Form, publication of the Publication Notice, and any
administrative expenses and fees incurred by SME in connection with providing notice,
responding to Class Member inquiries, and processing the submitted Claim Forms. SME agrees
that it will process the Claim Forms in a competent professional manner and will administer the
Settlement subject to the jurisdiction of the Court. SME agrees to review any forms of general
correspondence with the Class Members concerning the Class Members' Claim Forms with
Class Counsel prior to using such correspondence with Class Members generally.
ATTORNEYS' FEES AND EXPENSES
14. Class Counsel will apply to the Court for an award of attorneys' fees and
expenses in an amount not to exceed $1,453,790. Notwithstanding anything contained herein to
the contrary, in the event that the Court does not approve the award of attorneys' fees and
expenses requested by Class Counsel, or the Court awards attorneys' fees and expenses in an
amount less than that requested by Class Counsel, such decision shall not affect the validity and
enforceability of the Settlement and shall not be a basis for anyone to seek to terminate or void
the Settlement or for rendering the entire Settlement null, void, or unenforceable. Class Counsel
retain their right to appeal any decision by the Court regarding the Court's award of attorneys'
fees and costs. The amount awarded by the Court shall be payable by SME to Class Counsel by
delivery of check(s) or other negotiable instrument(s) or by wire transfer(s) within the later of ten
(10) business days after the Effective Date or ten (10) business days after Class Counsel,
following the Effective Date, provide SME with instructions for payment(s). Any fees and
expenses awarded by the Court will be deducted from the amount to be paid or credited to Class
Member or royalty accounts under paragraph 8(a)(1) above.
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15. Plaintiff will apply to the Court for an award of $15,000 for Plaintiff's service as a
class representative. The amount awarded by the Court shall be payable by SME in cash and
will not be deducted from any amounts to be paid (or credited) to Class Member royalty accounts
under paragraphs 8(a)(1) or (2) above.
DISTRIBUTIONS TO AUTHORIZED CLAIMANTS
16. The Past Settlement Relief and/or Prospective Settlement Relief, as applicable,
will be distributed to Class Members according to the following Plan of Allocation:
(a) Past Settlement Relief
(1) Each Authorized Past Claimant with at least 28,500 total
downloads of recordings attributable to Class Contracts and sold in the United States by SME on
Apple's iTunes Store from inception through December 31, 2010 will receive a fraction of that
portion of the settlement consideration provided for Past Settlement Relief in paragraph 8(a)(1)
above that remains after Class Counsel's fees and expenses have been deducted, the numerator
of which fraction shall be the total revenue from permanent digital downloads of recordings
attributable to such Authorized Past Claimant from such Authorized Past Claimant's Class
Contract(s) with respect to Sales in the United States through Apple's iTunes Store through
December 31, 2010, less any such revenue attributable to any period before December 31, 2010
for which the Authorized Past Claimant has provided SME with a release, and the denominator
of which shall be the total revenue from permanent digital downloads of recordings attributable
to all Authorized Past Claimants from all Authorized Past Claimants' Class Contracts with
respect to Sales in the United States on Apple's iTunes Store through December 31, 2010, less
any such revenue attributable to any period before December 31, 2010 for which any Authorized
Past Claimant has provided SME with a release.
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(2) Each Authorized Past Claimant with fewer than 28,500 total
downloads of recordings attributable to Class Contracts and sold in the United States by SME on
Apple's iTunes Store from inception through December 31, 2010 will, regardless of their royalty
account balance, receive a cash payment equal to a fraction of the $164,580 settlement fund for
Past Settlement Relief provided for in paragraph 8(a)(2) above, the numerator of which fraction
shall be one (1) and the denominator of which shall be the total number of Authorized Past
Claimants with fewer than 28,500 total downloads of recordings attributable to Class Contracts
and sold in the United States by SME on Apple's iTunes Store from inception through December
31, 2010.
(b) Prospective Settlement Relief
(1) The Class Contracts of Authorized Future Claimants shall be
deemed to have been modified to provide that, commencing January 1, 2011, SME shall
calculate royalties on Sales in the United States of permanent digital downloads and ringtones of
recordings attributable to such Class Contracts under the royalty provisions that it currently
applies to such Sales, and shall add an additional royalty equal to 3% of the gross amount paid or
credited to SME with respect to each such U.S. permanent digital download or ringtone, with no
deductions of any kind and no reserves held (the "Additional Royalty"). Notwithstanding
anything contained herein to the contrary, such Authorized Future Claimants who submit Claim
Forms within the period set forth in paragraph 12(b), but after the deadline set forth in paragraph
11(a) above, shall receive the Prospective Settlement Relief set forth in this paragraph 8(b)
commencing only from the first royalty accounting period following such submission.
(2) The Class Contracts of Class Members with fewer than 28,500
total downloads of recordings attributable to Class Contracts and sold in the United States by
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SME on Apple's iTunes Store from inception through December 31, 2010, but who (x) have an
aggregate total of at least $18,000 of royalty earnings attributable to Sales in the United States of
any such recordings on Apple's iTunes Store within any two consecutive royalty accounting
periods after January 1, 2011; and (y) thereafter notify SME in writing of their right to such
Additional Royalty within the period in which such Class Member, under the terms of the
applicable Class Contract, may object to royalty accountings for the later of such two
consecutive royalty accounting periods; shall be deemed to have been modified to provide that,
commencing with the royalty period following such notice of right and continuing thereafter,
SME shall calculate royalties on Sales in the United States of permanent digital downloads and
ringtones attributable to such Class Contracts under the royalty provisions that it currently
applies to such Sales, and shall add an Additional Royalty.
17. The Past Settlement Relief and/or Prospective Settlement Relief, as applicable,
shall be distributed by SME after the Effective Date.
(a) The Past Settlement Relief shall be distributed to each Authorized Past
Claimant by SME with the next royalty account statement issued to such Authorized Past
Claimant that is mailed at least 30 days after: (i) all timely Claim Forms for Past Settlement
Relief have been processed, and all claimants whose Claim Forms have been rejected or
disallowed, in whole or in part, have been notified and provided the opportunity to object to
such rejection or disallowance; (ii) all objections with respect to all rejected or disallowed
claims for Past Settlement Relief have been resolved to the satisfaction of the claimant or by the
Court, and all appeals therefrom have been resolved or the time therefor has expired (or a
reserve has been established, at SME's sole discretion, for such claims in dispute); (iii) the
Class Distribution Order (as defined in paragraph 19(g) below) has been entered, and (iv) all
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matters with respect to attorneys' fees, costs, and disbursements have been resolved by the
Court, and all appeals therefrom have been resolved or the time therefor has expired.
(b) The Prospective Settlement Relief shall be distributed to each Authorized
Future Claimant by SME with the next royalty account statement issued to such Authorized
Future Claimant that is mailed at least 30 days after: (i) all timely Claim Forms for Prospective
Settlement Relief have been processed, and all claimants whose Claim Forms have been
rejected or disallowed, in whole or in part, have been notified and provided the opportunity to
object to such rejection or disallowance; (ii) all objections with respect to all rejected or
disallowed claims for Prospective Settlement Relief have been resolved to the satisfaction of the
claimant or by the Court, and all appeals therefrom have been resolved or the time therefor has
expired (or a reserve has been established, at SME's sole discretion, for such claims in dispute);
(iii) the Determination Order (as defined in paragraph 19(i) below) has been entered, and (iv) all
matters with respect to attorneys' fees, costs, and disbursements have been resolved by the
Court, and all appeals therefrom have been resolved or the time therefor has expired.
ADMINISTRATION OF THE SETTLEMENT
18. Any Class Member who is not determined to be an Authorized Past Claimant or
an Authorized Future Claimant will not be entitled to receive any of the proceeds from the
Settlement but will otherwise be bound by all of the terms of this Stipulation and the Settlement,
including the terms of the Judgment to be entered in the Action and the releases provided for
herein, and will be barred from bringing any action against the Released Parties concerning the
Released Plaintiff Claims.
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19. SME shall process the Claim Forms and determine the extent, if any, to which a
Class Member is an Authorized Past Claimant or an Authorized Future Claimant, according to
the following conditions:
(a) Each Class Member shall be required to submit a completed Claim Form,
supported by such documents as are designated therein. As to each Class Contract, Claim
Forms shall be valid only if submitted on behalf of all Class Members who are parties to such
Class Contract.
(b) All Claim Forms must be submitted by the applicable dates specified in
paragraph 11 above for Past Settlement Relief and Prospective Settlement Relief, respectively.
Unless, by order of the Court, a later-submitted Claim Form by such Class Member is approved,
any Class Member who fails to submit a Claim Form by such dates shall be forever barred from
receiving any payment or credit pursuant to this Stipulation, but shall in all other respects be
bound by all of the terms of this Stipulation and the Settlement, including the terms of the
Judgment to be entered in the Action and the releases provided for herein, and will be barred
from bringing any action against the Released Parties concerning the Released Plaintiff Claims.
A Claim Form shall be deemed to have been submitted when posted, if received with a
postmark indicated on the envelope and if mailed by first-class mail and addressed in
accordance with the instructions thereon. In all other cases, the Claim Form shall be deemed to
have been submitted when actually received by SME.
(c) Each Claim Form shall be submitted to and reviewed by SME, which
shall determine in accordance with this Stipulation and the Plan of Allocation contained herein
and, based upon SME's records, the extent, if any, to which the person on whose behalf it was
submitted is an Authorized Past Claimant or an Authorized Future Claimant, subject to review
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by the Court pursuant to subparagraph (e) below. Claim Forms that do not meet the submission
requirements may be rejected. Any Claim Form indicating on its face that the person on whose
behalf the Claim Form was submitted does not meet the definition of a Class Member shall be
invalid, and such person shall not be an Authorized Past Claimant or an Authorized Future
Claimant. Notwithstanding the foregoing, a determination by SME that a claimant is not an
Authorized Past Claimant or an Authorized Future Claimant is subject to review as described in
subparagraph (e) below. Before SME makes a final determination to reject any Claim Form,
Class Counsel may request from SME a copy of any Claim Form that is proposed to be rejected
and any correspondence related thereto. Class Counsel shall be entitled to advise SME of its
position(s) with regard to the proposed rejection of such Claim Form(s).
(d) SME shall notify, in a timely fashion and in writing, each claimant whose
Claim Form it proposes to reject in whole or in part, with a copy to Class Counsel, setting forth
the reasons therefor, and shall expressly state in such notice that the claimant whom SME has
determined is not an Authorized Past Claimant or an Authorized Future Claimant has the right
to a review by the Court if the claimant so desires and complies with the requirements of
subparagraph (e) below.
(e) If any claimant that SME has determined is not an Authorized Past
Claimant or an Authorized Future Claimant desires to contest such determination, the claimant
must, within twenty (20) days after the date of mailing of the notice required in subparagraph
(d) above, serve upon SME a notice and statement of reasons indicating the claimant's grounds
for contesting the determination along with any supporting documentation, and requesting a
review thereof. SME shall perform the requested review and will inform the claimant whether
it has determined that the claimant is or is not an Authorized Past Claimant or an Authorized
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Future Claimant, as applicable. If the grounds stated by the claimant indicate, and the requested
review confirms, that the claimant is a party to a contract dated before January 1, 1976 that
otherwise meets the definition of a Class Contract, SME shall treat such contract as a Class
Contract. If a dispute concerning a determination that a claimant is not an Authorized Past
Claimant or an Authorized Future Claimant cannot otherwise be resolved, the claimant may
thereafter file an objection to the proposed Class Distribution Order or Determination Order, as
applicable, on notice to SME and Class Counsel. Claimants who are Class Members and are
involved in such a dispute which is not resolved in their favor shall (i) be forever barred from
receiving any payments for Past or Prospective Settlement Relief pursuant to this Stipulation set
forth herein, but shall in all respects be subject to and bound by this Stipulation, including the
releases provided for in this Stipulation, the Claim Form, and the Judgment; (ii) be conclusively
deemed to have fully, finally and forever released, relinquished, and discharged all Released
Plaintiff Claims; (iii) be conclusively deemed to have, and by operation of the Judgment shall
have, fully, finally, and forever released, relinquished, and discharged the Released Parties and
Class Counsel from all claims, including without limitation, Released Plaintiff Claims or claims
arising out of or in connection with the institution, prosecution, or assertion of the Action or the
Released Plaintiff Claims; (iv) be conclusively deemed to have covenanted not to sue any
Released Party and Class Counsel in any action or proceeding of any nature with respect to the
Released Plaintiff Claims; and (v) forever be enjoined and barred from asserting the Released
Plaintiff Claims against any Released Party and Class Counsel in any action or proceeding of
any nature, whether or not such claimants have filed an objection to the Settlement, Class
Distribution Order, Determination Order, or any application by Class Counsel for an award of
attorneys' fees, expenses and costs, whether or not the claims of such claimants have been
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approved or allowed, or such objection has been overruled by the Court. Claimants who are
rejected because they do meet the definition of a Class Member and are involved in such a
dispute which is not resolved in their favor shall be forever barred from receiving any payments
for Past or Prospective Settlement Relief pursuant to this Stipulation set forth herein, but are in
no other respects subject to or bound by this Stipulation because they are not Class Members
and therefore are not subject to or bound by this Stipulation.
(f) Within one hundred eighty (180) days after the deadline to submit Claim
Forms in connection with the Past Settlement Relief, SME shall provide to Class Counsel a
proposed accounting, subject to audit by Class Counsel, of payments and credits to Authorized
Past Claimants for the Past Settlement Relief. SME shall also provide the identities of
claimants it determined were not Authorized Past Claimantsas well as the reasons for each
such determination. SME shall retain the originals of all Claim Forms (including any envelopes
with the postmarks) received from claimants, and shall make copies or originals available to
Class Counsel within ten (10) business days upon request.
(g) No sooner than sixty (60) days after SME provides Class Counsel with
the information referred to in subparagraph (f) above, unless Class Counsel consents to an
earlier date after reviewing the information provided, SME will apply to the Court, on notice to
Class Counsel, for an order (the "Class Distribution Order") approving SME's administrative
determination of the Authorized Past Claimants hereunder. SME shall not be liable for any
costs incurred by any other party in connection with the Class Distribution Order or any other
challenge to SME's administrative determinations hereunder, and no penalty shall be assessed
against SME in the event that the Court modifies any administrative determination made by
SME, whether for Past Settlement Relief or Prospective Settlement Relief.
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(h) Within one hundred eighty (180) days after the deadline to submit Claim
Forms in connection with the Prospective Settlement Relief set forth in paragraph 11(b), SME
shall provide a spreadsheet to Class Counsel that contains sufficient information for the Parties
to determine the identities of the Authorized Future Claimants. SME shall also provide like
information regarding claimants it determined were not Authorized Future Claimants, as well as
the reasons for each such determination. SME shall retain the originals of all Claim Forms
(including any envelopes with the postmarks) received from claimants, and shall make copies or
originals available to Class Counsel within ten (10) business days upon request.
(i) No sooner than sixty (60) days after SME provides Class Counsel with
the information referred to in subparagraph (h) above, unless Class Counsel consents to an
earlier date after reviewing the information provided, SME will apply to the Court, on notice to
Class Counsel, for an order (the "Determination Order") approving SME's administrative
determination of the Authorized Future Claimants hereunder. SME shall not be liable for any
costs incurred by any other party in connection with the Determination Order or any other
challenge to SME's administrative determinations hereunder, and no penalty shall be assessed
against SME in the event that the Court modifies any administrative determination made by
SME.
20. Each claimant shall be deemed to have submitted to the jurisdiction of the Court
with respect to the claimant's claim, and the claim will be subject to investigation and discovery
ordered by the Court. No discovery shall be allowed on the merits of the Action or Settlement in
connection with processing of the Claim Forms.
21. All proceedings with respect to the administration, processing and determination
of claims described by paragraph 19 of this Stipulation and the determination of all controversies
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relating thereto, including disputed questions of law and fact with respect to the validity of
claims, shall be subject to the jurisdiction of the Court.
TERMS OF ORDER FOR NOTICE AND HEARING
22. Concurrently with their filing of this Stipulation, Class Counsel shall apply to the
Court for preliminary Court approval of the Settlement and entry of the Notice Order,
substantially in the form attached hereto as Exhibit A.
TERMS OF ORDER AND FINAL JUDGMENT
23. If the Court approves the Settlement contemplated by this Stipulation, counsel for
the parties shall request that the Court enter the Judgment, substantially in the form attached
hereto as Exhibit B.
OPT-OUT TERMINATION RIGHT
24. Defendant may terminate the Settlement if, after receiving all of the Requests for
Exclusion, it determines that either the number of, or the total wholesale value of permanent
digital downloads and ringtones represented by, recording artists and producers who would
otherwise be members of the Settlement Class, but who have timely and validly submitted
Requests for Exclusion, equals or exceeds a number set forth in a separate "Supplemental
Agreement" signed by the parties (the "Opt-Out Threshold"). Requests for Exclusion from
recording artists and producers who would not otherwise meet the Settlement Class definition do
not count toward the Opt-Out Threshold. The parties intend that the Supplemental Agreement
shall be specifically disclosed to the Court and offered for in camera inspection by the Court at
or prior to entry of the Notice Order, but, subject to the Court's approval, it shall not be filed
with the Court before the deadline for submitting Requests for Exclusion unless a dispute arises
as to its terms or the parties are ordered otherwise by the Court. The parties shall seek to keep
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the Opt-Out Threshold confidential before the deadline for submitting Requests for Exclusion.
In the event that the Court directs that the Supplemental Agreement be filed prior to the deadline
for submitting Requests for Exclusion, no party shall have any right to any relief by reason of
such disclosure. In the event of a termination of this Settlement pursuant to the Supplemental
Agreement, this Stipulation shall become null and void and of no further force and effect and the
provisions of paragraph 6 shall apply.
EFFECTIVE DATE OF SETTLEMENT, WAIVER AND TERMINATION
25. The Effective Date of Settlement shall be the date when all the following shall
have occurred:
(a) entry of the Notice Order in all material respects in the form appended
hereto as Exhibit A;
(b) approval by the Court of the Settlement, following notice to the
Settlement Class and a hearing; and
(c) entry by the Court of the Judgment, in all material respects in the form
appended hereto as Exhibit B, and the expiration of any time for appeal or review of the
Judgment, or, if any appeal is filed and not dismissed, after the Judgment is upheld on appeal in
all material respects and is no longer subject to review upon appeal or by writ of certiorari, or,
in the event that the Court enters an order and final judgment in a form other than that provided
above ("Alternative Judgment") and none of the parties hereto elects to terminate this
Settlement, the date that such Alternative Judgment becomes final and no longer subject to
appeal.
26. In addition to Defendant's rights under paragraph 24, Defendant or Plaintiff shall
have the right to terminate the Settlement and this Stipulation by providing written notice of their
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election to do so ("Termination Notice") to counsel for the other party hereto within thirty days
of (a) the Court's declining to enter the Notice Order or modifying the Notice Order in any
material respect not sought or consented to by both Defendant and Class Counsel; (b) the Court's
declining to approve the Settlement embodied in this Stipulation, or any material part of it; (c)
the Court's declining to enter the Judgment or modification of the Judgment in any material
respect; (d) the date upon which the Judgment is modified, reversed, or vacated in any material
respect by the Court of Appeals or the Supreme Court; (e) the date upon which the Court enters
an Alternative Judgment; or (f) the date upon which an Alternative Judgment is modified,
reversed, or vacated in any material respect by the Court of Appeals or the Supreme Court.
27. If Defendant fails to provide the amounts to be paid or credited to Authorized Past
Claimants pursuant to paragraph 16(a) or in the event of the entry of a final order of a court of
competent jurisdiction, in connection with a case commenced under the United States
Bankruptcy Code, determining that such payments or credits by SME are a preference, voidable
transfer, fraudulent transfer or similar transaction and are required to be returned, then, unless
such non-performance is cured within ten (10) business days of written demand from Class
Counsel, Class Counsel shall have the option to move the Court for appropriate relief including,
by way of example and not limitation, specific performance, or to terminate the Settlement by
providing a Termination Notice to Defendant's Counsel within thirty days of any failure of
Defendant to provide the bargained-for consideration set forth in paragraph 16(a).
28. Except as otherwise provided herein, in the event the Settlement is terminated or
the Effective Date fails to occur, then the Settlement shall be without prejudice and none of its
terms shall be effective or enforceable; the parties to this Stipulation shall be deemed to have
reverted to their respective status in the Action as of August 11, 2011; except as otherwise
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expressly provided, the parties shall proceed in all respects as if this Stipulation and any related
orders had not been entered; and any attorneys' fees and reimbursement of expenses paid by
SME to Class Counsel shall be returned to SME. In the event the Settlement is terminated or
modified in any material respect, Defendant shall be deemed to have retained all rights to object
to the maintenance of the Action as a class action pursuant to Rule 23 of the Federal Rules of
Civil Procedure and shall further be deemed not to have waived, modified, or be estopped from
asserting any additional defenses available to it.
NO ADMISSION OF WRONGDOING
29. SME denies any liability or wrongdoing of any kind associated with the claims
alleged and contends that this Action is not appropriate for class or collection action treatment
pursuant to Rule 23 of the Federal Rules of Civil Procedure or any other federal or state rule,
statute, law, or provision. SME continues to assert that the Action fails to meet the prerequisites
necessary for class or collective action treatment under applicable law, especially, but not solely,
with respect to predominance and manageability because the need to determine individualized
issues make the Action unmanageable consistent with due process. SME further denies that the
Action states a cause of action; that the practice as to which Plaintiff seeks relief violates any law
or is wrongful in any way whatsoever; that SME has breached any contract with Plaintiff or any
member of the Class; and that either Plaintiff or any member of the Class is entitled to any relief
whatsoever. SME further agrees that notwithstanding its good faith belief that it is not liable for
any of the claims asserted, and despite its good faith belief that certification is not appropriate,
SME will not oppose the District Court's certification of the Settlement Class contemplated by
this Agreement solely for purposes of effectuating this Settlement. Other than for purposes of
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this Settlement, SME does not waive its objections to certification of the Settlement Class, or any
other class, in this Action as a litigation class.
30. Neither this Stipulation, including all exhibits, orders or other documents referred
to herein, nor any terms or provisions of the Stipulation or any of the negotiations or proceedings
related to this Stipulation, whether or not consummated, shall be:
(a) offered or received against Defendant or any other Released Party as
evidence of, or construed as or deemed to be evidence of, any presumption, concession, or
admission by Defendant or any Released Party of the truth of any fact alleged by Plaintiff or the
validity of any claim that has been or could have been asserted in the Action or in any litigation,
or the deficiency of any defense that has been or could have been asserted in the Action or in
any litigation, or of any liability, negligence, fault, or wrongdoing of Defendant or any Released
Party;
(b) offered or received against Defendant or any Released Party as evidence
of a presumption, concession, or admission of any fault, misrepresentation, or omission with
respect to any statement or written document approved or made by Defendant or any Released
Party, or against Plaintiff and the Settlement Class as evidence of any infirmity in their claims;
(c) offered or received against Defendant or any Released Party as evidence
of a presumption, concession, or admission of any liabilitynegligence, fault or wrongdoing, or
in any way referred to for any other reason as against any of the parties to this Stipulation, in
any other civil, criminal, or administrative action or proceeding, other than such proceedings as
may be necessary to effectuate the provisions of this Stipulation; provided, however, that if this
Stipulation is approved by the Court, Defendant or any Released Party may refer to it to
effectuate the liability protection granted hereunder;
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(d) construed against Defendant or any Released Party or Plaintiff and the
Settlement Class as an admission or concession that the consideration to be given hereunder
represents the amount that could be or would have been recovered after trial; or
(e) construed as or received in evidence as an admission, concession or
presumption against Plaintiff or any of the Class Members that any of their claims are without
merit, or that any defenses asserted by Defendant has any merit, or that damages recoverable
under the complaints and amended complaints filed in the Action would not have exceeded the
Past Settlement Relief and Prospective Settlement Relief.
MISCELLANEOUS PROVISIONS
31. All of the exhibits attached hereto are hereby incorporated by reference as though
fully set forth herein.
32. The parties to this Stipulation intend the Settlement to be a final and complete
resolution of all disputes asserted or that could be or could have been asserted by the Plaintiff,
the Settlement Class, and/or any of the Class Members against the Released Parties with respect
to the Released Plaintiff Claims. Accordingly, Defendant agrees not to assert that the litigation
was brought in bad faith or without a reasonable basis. The parties hereto shall assert no claims
of any violation of Rule 11 of the Federal Rules of Civil Procedure relating to the prosecution,
defense, or settlement of the Action. The parties agree that the amount paid and the other terms
of the Settlement were negotiated at arm's length in good faith by the parties, and relfect a
settlement that was reached voluntarily by the patries after consultation with their respective
experienced legal counsel.
33. This Stipulation may not be modified or amended, nor may any of its provisions
be waived except by a writing signed by all parties hereto or their successors-in-interest.
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34. The headings herein are used for the purpose of convenience only and are not
meant to have legal effect.
35. The administration and consummation of the Settlement as embodied in this
Stipulation shall be under the authority of the Court, and the Court shall retain jurisdiction for the
purpose of entering orders providing for award of attorneys' fees and expenses to Class Counsel,
authorizing distribution to Authorized Past and Future Claimants, and enforcing the terms of this
Stipulation.
36. If the Settlement is approved by the Court, after the Settlement Hearing on notice,
Plaintiff shall move the Court for entry of the Judgment.
37. All counsel and any other person executing this Stipulation and any of the
exhibits hereto, or any related settlement documents, warrant and represent that they have the full
authority to do so and that they have the authority to take appropriate action required or
permitted to be taken pursuant to the Stipulation to effectuate its terms.
38. This Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the parties hereto.
39. The construction, interpretation, operation, effect and validity of this Stipulation,
and all documents necessary to effectuate it, shall be governed by the internal laws of the state of
New York without regard to conlficts of laws, except to the extent that preemption by federal
law requires that federal law govern.
40. This Stipulation shall not be construed more strictly against one party than
another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel
for one of the parties, it being recognized by the parties that this Stipulation is the result of arm's
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length negotiations between the parties and that all parties have contributed substantially and
materially to the preparation of this Stipulation.
41. The waiver by one party of any breach of this Stipulation by any other party shall
not be deemed a waiver of any other prior or subsequent breach of this Stipulation. The waiver
by one party of any breach of this Stipulation by any other party shall not be deemed a waiver of
any other prior or subsequent breach of this Stipulation.
42. This Stipulation and its exhibits and the Supplemental Agreement constitute the
entire agreement among the parties hereto concerning the Settlement of the Action, and no
representations, warranties, or inducements have been made by any party hereto other than those
contained and memorialized in such documents.
43. This Stipulation may be executed in one or more counterparts. All executed
counterparts and each of them shall be deemed to be one and the same instrument.
44. No opinion or advice concerning the tax consequences of the proposed Settlement
to individual Class Members is being given or will be given by Class Counsel or Defendant's
Counsel; nor is any representation or warranty in this regard made by virtue of this Stipulation.
Each Class Member's tax obligations, and the determination thereof, are the sole responsibility
of the Class Member, and it is understood that the tax consequences may vary depending on the
particular circumstances of each individual Class Member. Notwithstanding the foregoing,
Defendant may report its payments pursuant to this Settlement in accordance with its ordinary
practices with respect to payments made to its artists.
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45. The Parties hereto: (a) acknowledge that it is their intent to consummate this
Stipulation; and (b) agree to cooperate to the extent necessary to effectuate and implement all
terms and conditions of this Stipulation and to exercise their best efforts and to act in good faith
to accomplish the foregoing terms and conditions of the Stipulation.
DATED: fvlArekt 2012
CAPLAN & ROSS, LLP
By: /^7 Brian D. Caplan beaplan@cap rco- oss. Jonathan J. R [email protected]
270 Madison Avenue, 13th Floor New York, New York 10016 Telephone: (212) 973-2376 Facsimile: (212) 661-4290
Counsel for Plaintiff
MILBERG LLP
By: Sanford P. Dumain [email protected] Benjamin Y. Kaufman [email protected] Gary S. Snitow [email protected]
One Penn Plaza New York, New York 10119-0165 Telephone: (212) 594-5300 Facsimile: (212) 868-1229
Counsel for Plaintiff
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45. The Parties hereto: (a) acknowledge that it is their intent to consummate this
Stipulation; and (b) agree to cooperate to the extent necessary to effectuate and implement all
terms and conditions of this Stipulation and to exercise their best efforts and to act in good faith
to accomplish the foregoing terms and conditions of the Stipulation.
DATED: , 2012
CAPLAN & ROSS, LLP
By: Brian D. Caplan [email protected] Jonathan J. Ross jross @caplanross.com
270 Madison Avenue, 13 th Floor New York, New York 10016 Telephone: (212) 973-2376 Facsimile: (212) 661-4290
Counsel for Plaintiff
MILBERG LLP
r By: /"--) cA- /
P. Duniain dd [email protected]
Benjamin Y. Kaufman [email protected] Gary S. Snitow [email protected]
One Penn Plaza New York, New York 10119-0165 Telephone: (212) 594-5300 Facsimile: (212) 868-1229
Counsel for Plaintiff
35
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PROBSTE ER & BUTLER 0
By: r ^'' ^- B. Weiner
[email protected] 9696 Culver Blvd., Suite 205 Culver City, California 90232 Telephone: (310) 836-1400 Facsimile: (310) 836-1420
Counsel for Plaintiff
COVINGTON & BURLING LLP
By: Jonathan M. Sperling [email protected]
The New York Times Building 620 Eighth Avenue New York, New York 10018-1405 Telephone: (212) 841-1000 Facsimile: (212) 841-1010
Counsel for Defendant
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PROBSTEIN, WEINER & BUTLER
By: Gerald B. Weiner [email protected]
9696 Culver Blvd., Suite 205 Culver City, Califonria 90232 Telephone: (310) 836-1400 Facsimile: (310) 836-1420
Counsel for Plaintiff
COVINGTON ING LL
By: J an M. Sperling
[email protected] The New York Times Building 620 Eighth Avenue New York, New York 10018-1405 Telephone: (212) 841-1000 Facsimile: (212) 841-1010
Counsel for Defendant
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
ELMO SHROPSHIRE, INDIVIDUALLY AND AS A MEMBER OF "ELMO & PATSY"; ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, 06 Civ. 3252 (GBD) (KNF)
Plaintiff, ECF CASE
-against-
SONY MUSIC ENTERTAINMENT, A Delaware General Partnership,
Defendant
PRELIMINARY ORDER FOR NOTICE AND HEARING IN CONNECTION WITH SETTLEMENT PROCEEDINGS
WHEREAS, on March 7, 2012, the parties to the above-entitled action (the "Action")
entered into a Stipulation and Agreement of Settlement (the "Stipulation") which is subject to
review under Rule 23 of the Federal Rules of Civil Procedure and which, together with the
exhibits thereto, sets forth the terms and conditions for the proposed settlement of the claims
alleged in the Third Amended Complaint with prejudice and without costs; and the Court having
read and considered the Stipulation and the accompanying documents; and the parties to the
Stipulation having consented to the entry of this Order; and all capitalized terms used herein
having the meanings defined in the Stipulation;
NOW, THEREFORE, IT IS HEREBY ORDERED, this day of ,
2012 that:
1. The Court hereby preliminarily approves the Stipulation and the Settlement set
forth therein, as being a fair, reasonable and adequate settlement as to all Class Members within
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the meaning of Rule 23 of the Federal Rules of Civil Procedure, and as being the product of
informed, extensive, arm's length negotiation by counsel. The Court directs the Parties to
proceed with the Settlement pursuant to the terms and conditions of the Stipulation and exhibits
thereto, subject to further consideration at the Settlement Hearing described below.
2. Pursuant to Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure, and
for the purposes of the Settlement only, this Action is hereby conditionally certified as a class
action on behalf of all recording artists and producers who (a) are parties to a contract dated
between January 1, 1976 and December 31, 2001 (the "Class Period") that (i) was entered into
with CBS Records or Sony Music Entertainment, including their unincorporated divisions and
business units, their United States subsidiaries as of July 2004, and any predecessor in interest to
any of them; (ii) is currently held by Sony Music Entertainment, including its unincorporated
divisions and business units and United States subsidiaries; (iii) contains a clause providing that
SME will pay to such Class Member 50% of SME's net receipts in respect of any Master
Recording leased or licensed by SME to a third party (a "Net Receipts Provision"); (iv) does not
contain a clause capping the amount to be paid under the Net Receipts Provision, such as a
clause limiting payments under the Net Receipts Provision to the amount that would be paid
under another royalty provision contained in the contract; (v) does not contain an express rate for
digital exploitations other than a so-called "Audiophile" or "New Technology" provision; and
(vi) was not modified to include an express rate for digital exploitations or to make any change
to the Net Receipts Provision (a "Class Contract"); and (b) did not provide SME with a release of
claims relating to payment of royalties on downloads or ringtones covering the entire period
from January 1, 2004 through December 31, 2010. Excluded from the Class are the Defendant
and any person, trust, firm, corporation, or other entity afifliated with or related to the Defendant.
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3. The Court finds, for the purposes of the Settlement onlythat the prerequisites for
a class action under Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been
satisfied in that: (a) the number of Class Members is so numerous that joinder of all members
thereof is impracticable; (b) there are questions of law and fact common to the Class; (c) the
claims of the named representative are typical of the claims of the Class he seeks to represent;
(d) the Plaintiff and Plaintiff s Counsel will fairly and adequately represent the interests of the
Class; (e) the questions of law and fact common to the members of the Class predominate over
any questions affecting only individual members of the Class; and (f) a class action is superior to
other available methods for the fair and efficient adjudication of the controversy.
4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and for the purposes
of the Settlement only, Plaintiff Elmo Shropshire is certified as Class Representative and the law
ifrms of Caplan & Ross, LLP, Milberg LLP, and Probstein, Weiner & Butler are certified as
Class Counsel.
5. A hearing (the "Settlement Hearing") pursuant to Rule 23(e) of the Federal Rules
of Civil Procedure is hereby scheduled to be held before the Court on , 2012,
at .m. for the following purposes:
(a) to finally determine whether this Action satisfies the applicable
prerequisites for class action treatment under Rules 23(a) and (b) of the Federal Rules of Civil
Procedure;
(b) to determine whether the proposed Settlement is fair, reasonable, and
adequate, and should be approved by the Court;
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(c) to determine whether the Order and Final Judgment as provided under the
Stipulation should be entered, dismissing the Third Amended Complaint filed herein, with
prejudice and without costs;
(d) to determine whether the proposed Plan of Allocation for the proceeds of
the Settlement is fair and reasonable, and should be approved by the Court;
(e) to consider Class Counsel's application for an award of attorneys' fees and
expenses and a service award for Plaintiff; and
(f) to rule upon such other matters as the Court may deem appropriate.
6. If the Court approves the Settlement, then following the Settlement Hearing, it
shall enter the Order and Final Judgment, substantially in the form annexed to the Stipulation as
Exhibit B, the terms of which are hereby incorporated by reference.
7. Neither certification of the Settlement Class for settlement purposes only, nor any
other act relating to the negotiation, execution or implementation of the Stipulation, shall be
considered as a factor in connection with any class certification issue(s) if the Stipulation
terminates or the Settlement is not finally approved.
8. The Settlement Hearing may be adjourned by the Court without notice to the
Class other than by an announcement of the adjounrment at the scheduled time of the Settlement
Hearing or at the scheduled time of any adjournment of the Settlement Hearing. The Court may
consider (with the consent of both Plaintiff and Defendant) modifications of the Settlement, the
Plan of Allocation, and/or Class Counsel's application for an award of attorneys' fees and
expenses and a service award for Plaintiff without further notice to the Class.
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9. The Court reserves the right to enter its Order and Final Judgment approving the
Stipulation and dismissing the Third Amended Complaint with prejudice and without costs
regardless of whether it has awarded attorneys' fees and expenses or a service award to Plaintiff.
10. The Court approves the form, substance and requirements of the Notice of
Pendency of Class Actions, Proposed Settlements of Class Actions, Motions for Attorneys' Fees
and Expenses, and Settlement Hearings (the "Notice") and the Claim Form, annexed hereto as
Exhibits 1 and 2 respectively.
11. Provided that this Order has been entered on or before March 15, 2012, SME shall
cause the Notice and the Claim Form, substantially in the forms annexed hereto, to be mailed to
each royalty recipient on or before April 6, 2012 as provided in the Stipulation.
12. SME shall maintain a web site in connection with the Settlement, which will
prominently display links through which potential Class Members may submit a request for
copies of their contracts and may indicate whether they wish to be contacted by Class Counsel.
SME will provide to Class Counsel the names and contact information of persons who indicate
that they wish to be contacted by Class Counsel.
13. The Court approves the form of Publication Notice of the pendency of this class
action and the proposed settlement in substantially the form and content annexed hereto as
Exhibit 3 and directs that SME shall cause the Publication Notice to appear in Billboard
magazine, one-quarter page in size, within 30 days after the mailing of the Notice and Claim
Form.
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14. Defendant's Counsel shall, at least 60 days before the Settlement Hearing, file
with the Court proof of mailing of the Notice and Claim Form, and proof of publication of the
Publication Notice.
15. This civil action was commenced after February 18, 2005. The Court directs
Defendant to notify the appropriate Federal and State ofifcials under the Class Action Fairness
Act of 2005, 28 U.S.C. § 1715. Defendant's Counsel shall, at or before the Settlement Hearing,
ifle with the Court proof of compliance with the Class Action Fairness Act of 2005, 28 U.S.C§
1715.
16. The form and content of the Notice, and the method set forth herein of notifying
the Class of the Settlement and its terms and conditions, meet the requirements of Rule 23 of the
Federal Rules of Civil Procedure, due process, and any other applicable law, constitute the best
notice practicable under the circumstances, and shall constitute due and sufficient notice to all
persons and entities entitled thereto.
17. Class Members shall be bound by all determinations and judgments in this
Action, whether favorable or unfavorable, unless such persons submit a Request for Exclusion
from the Class in a timely and proper manner, as hereinafter provided. A Class Member wishing
to make such request shall mail the request in written form by ifrst class mail postmarked no
later than , 2012 to SME, at the Post Office Box indicated in the Notice. Such
Request for Exclusion shall clearly indicate the name, address and telephone number of the artist
(individual or band), producer or company seeking exclusion, that the sender requests to be
excluded from the Class in Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD)
(KNF), and must be signed by such person. Such persons requesting exclusion are also asked
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(but not required) to provide the date(s) of the Class Contract(s) or any of its amendments and
the royalty account number(s) from their royalty statement(s). The Request for Exclusion shall
not be effective unless it provides the required information and is made within the time stated
above, or the exclusion is otherwise accepted by the Court. As to each Class Contract, Requests
for Exclusion shall be valid only if submitted on behalf of all Class Members who are parties to
such Class Contract.
18. Class Counsel shall submit their papers in support of final approval of the
Settlement, the proposed Plan of Allocation, and their application for attorneys' fees and
expenses and a service award for Plaintiff by no later than , 2012.
19. Any Class Member may be heard and/or appear at the Settlement Hearing to show
cause why the proposed Settlement should not be approved as fair, reasonable and adequate and
why the Order and Final Judgment should not be entered thereon; why the proposed plan of
allocation should not be approved as fair, reasonable and adequate; or why Class Counsel should
not be awarded attorneys' fees and expenses in the amount sought by Class Counsel or the
Plaintiff should not be awarded a service award in the amount sought; provided, however, that no
Class Member shall be heard or be entitled to contest the approval of the terms and conditions of
the proposed Settlement, the Order and Final Judgment to be entered, the proposed plan of
allocation or Class Counsel's application for an award of attorneys' fees and expenses and a
service award for Plaintiff, unless on or before , 2012, the Class Member
has served by hand or by first-class mail written objections and copies of any supporting papers
and briefs (which must contain proof of Class membership) upon Jonathan M. Sperling,
Covington & Burling LLP, The New York Times Building, 620 Eighth Avenue, New York, New
York 10018-1405 on behalf of the Defendant and Brian Caplan, Caplan & RossLLP, 270
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Madison Avenue, 13 ht Floor, New York, New York 10016 and Benjamin Y. Kaufman, Milberg
LLP, One Penn Plaza, New York, New York 10119-0165 on behalf of the Plaintiff and the
Class, and has filed the objections, papers and briefs showing due proof of service upon all
counsel identified above with the Clerk of the Court, United States District Court for Southern
District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New
York, NY 10007-1312. Attendance at the hearing is not necessary; however, persons wishing to
be heard orally in opposition to the approval of the Settlement, the Plan of Allocation, and/or the
request for attorneys' fees and expenses and a service award for Plaintiff are required to indicate
in their written objection their intention to appear at the hearing. Persons who intend to object to
the Settlement, the Plan of Allocation, and/or Class Counsel's application for an award of
attorneys' fees and expenses and a service award for Plaintiff and who desire to present evidence
at the Settlement Hearing must include in their written objections the identity of any witnesses
they may call to testify and exhibits they intend to introduce into evidence at the Settlement
Hearing. Class Members do not need to appear at the hearing or take any other action to indicate
their approval.
20. Class Counsel shall submit their papers in response to any objections by no later
than , 2012.
21. Any Class Member who does not object to the Settlement and/or the Plan of
Allocation and/or the adequacy of representation and/or Class Counsel's application for an award
of attorneys' fees and expenses and a service award for Plaintiff in the manner prescribed in the
Notice shall be deemed forever to have waived such objection and shall forever be barred from
making any objection to the fairness, adequacy or reasonableness of the proposed Settlement, the
Order and Final Judgment to be entered approving the Settlement, the Plan of Allocation, the
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adequacy of representation or the application by Class Counsel for an award of attorneys' fees
and expenses and a service award for Plaintiff and from otherwise being heard concerning these
subjects in this or any other proceeding.
22. Pending final determination of whether the Settlement should be approved, the
Plaintiffs, all Class Members, and each of them, and anyone who acts or purports to act on their
behalf, shall not institute, or commence any action which asserts Released Plaintiff Claims
against any Released Party. Pending the Settlement Hearing, the Court stays all proceedings in
the Action, other than those proceedings necessary to carry out or enforce the terms and
conditions of the Stipulation.
23. This Order, the Settlement, and any of their terms, and all negotiations,
discussions and proceedings in connection with this Order and the Settlement, shall not
constitute evidence, or an admission by the Defendant or the other Released Parties, that any acts
of wrongdoing have or have not been committed and shall not be deemed to create any inference
that there is or is not any liability on the part of the Defendant or any other Released Parties.
This Order, the Settlement, and any of their terms, and all negotiations, discussions and
proceedings in connection with this Order and the Settlement, shall not be offered or received in
evidence or used for any other purpose in this or any other proceeding in any court,
administrative agency, arbitration tribunal, or other forum of any kind or character in the United
States or any other country except as necessary to enforce the terms of this Order and/or the
Settlement.
24. In the event the Settlement is terminated or the Effective Date fails to occur, then,
(i) the Stipulation, including any amendment(s) thereof, this Order conditionally certifying the
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Class, the Class Representative and Class Counsel for purposes of the Settlement, and any
findings or stipulations regarding certification of the Class shall be null and void, of no further
force or effect, and without prejudice to any party, and may not be introduced as evidence or
referred to in any actions or proceedings by any person or entity; (ii) the parties shall be deemed
to have reverted to their respective status in the Action as of August 11, 2011; (iii) except as
otherwise expressly provided, the parties shall proceed in all respects as if the Stipulation and
any related orders had not been entered; and (iv) any attorneys' fees and reimbursements of
expenses paid by SME to Class Counsel shall be returned to SME
25. The Court retains exclusive jurisdiction over the Action to consider all further
matters arising out of or connected with the Settlement.
Dated: New York, New York , 2012
Honorable George B. Daniels UNITED STATES DISTRICT JUDGE
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UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
Notice of Pendency of Class Actions, Proposed Settlements of Class Actions, Motions for Attorneys' Fees and Expenses, and Settlement Hearings
To all persons entitled to royalty payments for permanent digital downloads and ringtones under contracts currently held by CBS Records or Sony Music Entertainment ("SME") or by Arista Music, formerly known as BMG Music ("Arista"):
This Notice summarizes Class Members' rights under the proposed settlements of two class action lawsuits as described below. You are eligible for payment if (1) you are a Class Member (See the section titled "Who is a Class Member?" below), (2) you do not exclude yourself, or "opt out" (See the section titled "Opt-Out of the Settlement Classes" below), and (3) you submit a valid Claim Form (See the section titled "Participate in the Settlements" below).
These actions challenged the calculation of royalty payments due to Class Members for sales of permanent digital downloads and ringtones of recordings under Class Contracts. The proposed settlements (1) make $7.95 million available to all Class Members in connection with sales in the U.S. of permanent digital downloads and ringtones through December 31, 2010 and (2) provide for an increase in the royalty rate for certain Class Members for such sales atfer January 1, 2011.
THIS NOTICE COULD AFFECT YOUR RIGHTS — PLEASE READ IT CAREFULLY
This Notice is provided to you by orders of the United States District Court, Southern District of New York. This summarizes the proposed settlements of two class-action lawsuits (Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF) (the "SME Action") and Youngbloods v. BMG Music, 07 Civ. 2394 (GBD) (KNF) (the "BMG Action")) asserting breach of contract claims relating to the calculation by SME and Arista of royalty payments due to Class Members for sales of permanent digital downloads and ringtones under Class Contracts. SME and Arista deny all allegations of wrongdoing and have asserted many defenses. The settlements are not an admission of wrongdoing.
Who Is A Class Member?
You are a Class Member if you: (a) are a party to a "Class Contract" (as defined below) and (b) did not provide SME or Arista with a release of claims relating to payment of royalties on downloads or ringtones covering the entire period from January 1, 2004 through December 31, 2010.
"Class Contract" means a contract dated between January 1, 1976 and December 31, 2001 (the "Class Period"), that (i) was entered into with CBS Records or SME or with BMG Music (now known as Arista), including their unincorporated divisions and business units, their United States subsidiaries as of July 2004, and any predecessor in interest to
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any of them; (ii) is currently held by SME or Arista, including their unincorporated divisions and business units and United States subsidiaries; (iii) contains a clause providing that SME or Arista will pay to such Class Member 50% of SME's or Arista's net receipts in respect of any Master Recording leased or licensed by SME or Arista to a third party (a "Net Receipts Provision"); (iv) does not contain a clause capping the amount to be paid under the Net Receipts Provision, such as a clause limiting payments under the Net Receipts Provision to the amount that would be paid under another royalty provision contained in the contract; (v) does not contain an express rate for digital exploitations other than a so-called "Audiophile" or "New Technology" provision; and (vi) was not modified to include an express rate for digital exploitations or to make any change to the Net Receipts Provision.
For the Class in the SME Action, the Class Labels are those that were affiliated with or subsidiaries of CBS Records or Sony Music Entertainment as of July 2004, including but not limited to Columbia Records and Epic RecordsFor the Class in the BMG Action, the Class Labels are those that were affiliated with or subsidiaries of BMG Music as of July 2004, including but not limited to Arista Records, Jive Records, and RCA Records.
Only contracts with these Class Labels dated between January 1, 1976 and December 31, 2001 are covered by these settlements. If you have a contract dated before January 1, 1976 that otherwise meets the definition of a Class Contract it may be treated as a Class Contract.
Each person to whom this Notice is being sent should review his or her contract(s) and any amendments to determine whether he, she or it is a Class Member. If you do not have your contract or any of its amendments, you may contact SME or Arista to request a copy. Visit the settlement website at [www. .com] for links to request for copies of your contract(s) and to indicate whether you wish to be contacted by Class Counsel.
What Are The Terms Of The Proposed Settlements?
This Notice is only a summary of the proposed settlements. The complete terms of each proposed settlement are set forth in two formal Stipulations and Agreements of Settlement (together, the "Stipulations") which are on file with the Court for each case and are also available by visiting the settlement website at [www. .com] or through Class Counsel.
The Court did not decide in favor of Plaintiffs or Defendants. Instead, both sides, with the assistance of a mediator, agreed to these settlementsSettlement avoids the costs of a trial, and assures that settlement benefits go to Class Members. The Class Representatives and their attorneys think these settlements are in the best interests of the Classes.
The settlements are summarized below.
The Settlement Funds for Sales Through December 31, 2010 (Past Settlement Relief)
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$7.65 million, less Plaintiffs' attorneys' fees and expenses as may be approved by the Court, is available for Class Members (1) who are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) who submit a valid Claim Form. These funds would be paid or credited, as applicable, pro rata to the royalty accounts of qualifying Class Members
$300,000 cash, without any deduction of fees or expenses, is being made available to all Class Members, regardless of their royalty account balance, (1) who are parties to a Class Contract under which fewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) who submit a valid Claim Form. The cash would be paid equally per capita among qualifying Class Members.
The proposed settlements allocate the $7.65 million and $300,000 Past Settlement Relief amounts between the SME Action and the BMG Action based on the relative proportion of sales by SME artists to sales by Arista artists in the US. on Apple's iTunes Store through December 31, 2010.
Based on this sales data, 54.86% is attributed to the settlement with SME ($4,196,790 of the $7.65 million fund and $164,580 of the $300,000 fund) and 45.14% is attributed to the settlement with Arista ($3,453,210 of the $7.65 million fund and $135,420 of the $300,000 fund).
Additional Royalty for Sales atfer December 31, 2010 (Prospective Settlement Relief)
SME and Arista have agreed to modify the Class Contracts of Class Members who submit a valid Claim Form and who qualify for Prospective Settlement Relief to provide that SME and Arista will calculate royalties on Sales' in the United States of permanent digital downloads and ringtones of recordings attributable to Class Contracts under the royalty provisions that it currently applies to such Sales, and shall add an additional royalty equal to 3% of the gross amount paid or credited to SME or Arista with respect to each such U.S permanent digital download or ringtone, with no deductions of any kind and no reserves held (the "Additional Royalty").
The Additional Royalty is available to Class Members who are party to a Class Contract under which:
For purposes of these settlements, "Sales" means any distribution in the United States of permanent digital downloads or ringtones, whether by sale, license, or otherwise, excluding, for the avoidance of doubt, uses of sound recordings attributable to Class Contracts in motion pictures, television, advertising, or other uses for which SME or Arista currently accounts under such Class Contracts' Net Receipts Provisions.
1
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(i) at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 (such Additional Royalty to be applied to all Sales after January 1, 2011); or
(ii) fewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010, but who (x) have at least $18,000 of royalty earnings attributable to Sales in the United States of any such recordings on Apple's iTunes Store within any two consecutive royalty accounting periods atfer January 1, 2011; and (y) thereafter notify SME or Arista in writing of their right to such Additional Royalty within the period in which such Class Member, under the terms of the applicable Class Contract, may object to royalty accountings for the later of such two consecutive royalty accounting periods (provided that SME and Arista shall owe such Additional Royalty only commencing with the royalty period following such assertion of right).
Class Counsel Fee and Expense Requests
In the SME Action, the Court preliminarily ordered that the law firms of Caplan & Ross, LLP and Milberg LLP in New York, NY and Probstein, Weiner & Butler in Culver City, CA will represent the Class.
In the BMG Action, the Court preliminarily ordered that the law firms of Caplan & Ross, LLP and Milberg LLP in New York, NY and Law Offices of Thomas A. Cohen in Mill Valley, CA will represent the Class.
These lawyers are called Class Counsel. You will not be separately charged for these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.
Class Counsel are moving the Court to award them attorneys' fees and expenses in the amounts of $1,453,790 in the SME Action and $1,196,210 in the BMG Action.
The Court will determine what amount of attorneys' fees and expenses shall be payable to Class Counsel. The amounts awarded by the Court will be payable solely from the Past Settlement Relief available to Class Members who are parties to Class Contracts under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store as of December 31, 2010. The fees and expenses will not be sought from the Past Settlement Relief available to Class Members who are parties to Class Contracts under which fewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store as of December 31, 2010.
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Class Counsel are also moving the Court to award $15,000 to Elmo Shropshire and $15,000 to The Youngbloods for their services as Class Representatives.
The amounts awarded by the Court to the Class Representatives will be paid by SME and Arista in cash and will not be deducted from any of the available Past Settlement Relief.
The Court will determine the appropriate amount of these awards. The settlements are not conditioned upon approval of any of the attorneys' fees and expenses or Class Representative award amounts.
Class Counsel will file their papers in support of ifnal approval of the Settlements and their application for attorneys' fees and reimbursement of expenses, and for payments to the Class Representatives, by no later than , 2012. These papers will also be posted on the settlement website ([www. .com]).
Payments to Settlement Class Members
If the settlements are approved by the Court, then:
Class Members who (1) are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) submit a valid Claim Form, will receive their pro rata share of the Past Settlement Relief. 2 They will also receive the Additional Royalty for Sales atfer December 31, 2010.
Class Members who (1) are parties to a Class Contract under whichfewer than 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 and (2) submit a valid Claim Form will receive aper capita share of the Past Settlement Relief. 3 They are not eligible to receive the Additional Royalty unless they (x) have an aggregate total of at least $18,000 of royalty earnings attributable to sales in the United States of any such recordings on Apple's iTunes Store within any two
2 The pro rata share will be a fraction, the numerator of which is the total revenue from permanent digital downloads of recordings attributable to the claimant's Class Contract(s) with respect to Sales in the U.S. through Apple's iTunes Store through December 31, 2010, less any such revenue attributable to any period before December 31, 2010 for which the claimant has provided SME or Arista with a release, and the denominator of which is the total revenue from permanent digital downloads of recordings attributable to all such claimants' Class Contracts from Sales in the U.S. on Apple's iTunes Store through December 31, 2010, less any such revenue attributable to any period before December 31, 2010 for which any such claimant has provided SME or Arista with a release.
3 The per capita share be a fraction, the numerator of which is one (1), and the denominator of which is the total number of Class Members who submit a valid Claim Form and who had fewer than 28,500 total downloads of recordings attributable to Class Contracts and sold in the United States by SME or BMG (n/k/a Arista) on Apple's iTunes Store from inception through December 31, 2010.
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consecutive royalty accounting periods after January 1, 2011 and (y) thereafter notify SME or Arista in writing of their right to such Additional Royalty in the period within which such Class Member, under the terms of the applicable Class Contract, may object to royalty accountings for the later of such two consecutive royalty accounting periods. SME and Arista will owe such Additional Royalty starting with the next royalty period following the assertion of right.
PLEASE NOTE THAT Class Members must submit a valid Claim Form to receive any benefits under the settlements. If you are a Class Member and do not submit a valid Claim Form, you will not receive any benefits under the settlements, but you nevertheless will be bound to the terms of the settlement(s) by the judgment of the Court.
What Happens Next?
The Court will hold Settlement Hearings on day, , 2012, at .m. at the United States District Court, Southern District of New York, 500 Pearl Street,
Courtroom 21D, New York, NY 10007-1312, to hear any objections and to consider whether to give final approval to the settlements. The Coutr will hear objections at the hearings from those who timely object to the settlements (see below). You may patricipate in a Settlement Hearing with or without an attorney, but if you choose to be represented by an attorney you must do so at your own expense. YOU DO NOT HAVE TO APPEAR AT A HEARING TO RECEIVE THE BENEFITS OF A SETTLEMENT. YOU DO HAVE TO SUBMIT A CLAIM FORM TO RECEIVE THE BENEFITS OF A SETTLEMENT.
What Are Your Options?
Participate in the Settlements. If you are a Class Member and wish to receive payment of the Past Settlement Relief, you must mail a completed Claim Form postmarked on or before the later of , 2012 or 45 days from your receipt of contracts from SME or Arista pursuant to a timely request for copies of such contracts as provided for in the Claim Form. A Claim Form is enclosed with this Notice. A Claim Form is also available at the settlement website at [www. .com]. This is the only deadline for Past Settlement Relief.
As to each Class Contract, Claim Forms shall be valid only if submitted on behalf of all Class Members who are parties to such Class Contract.
Class Members who submit valid Claim Forms for the Past Settlement Relief and who are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 will automatically receive any Prospective Settlement Relief to which they are entitled.
Class Members who submit valid Claim Forms for the Past Settlement Relief and who are parties to a Class Contract under which fewer than 28,500 total
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downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 will not automatically be considered for any Prospective Settlement Relief to which they may become entitled based on their post-December 31, 2010 royalty earnings. If their post-December 31, 2010 royalty earnings would meet the threshold to qualify them to receive the Additional Royalty increase, they will need to assert their right to such Additional Royalty as described above.
Class Members who are parties to a Class Contract under which at least 28,500 total downloads of recordings were sold in the United States on Apple's iTunes Store from inception through December 31, 2010 who fail to submit a timely Claim Form to receive Past Settlement Relief may still submit a Claim Form by
, 2014 to receive Prospective Settlement Relief. The Prospective Settlement Relief for such eligible Class Members will only apply beginning with the royalty accounting period following submission of the Claim Form, so missing the deadline for Past Settlement Relief means missing the 3% Additional Royalty for the upcoming royalty accounting period.
If you are a Class Member and do not submit a valid Claim Form, then you will not share in any of the Past Settlement Relief or Prospective Settlement Relief but you nevertheless will be bound to the terms of the settlement(s) by the judgment of the Court.
Opt Out of the Settlement Classes. You and the other parties to your Class Contract(s), if any, may exclude yourselves from the settlements. If you choose to exclude yourself,
" please provide a written statement that includes: (1) your full name; (2) or "opt out, your address; (3) your telephone number; (4) the name of the artist (individual or band), producer or company seeking exclusion (if any different from your name); (5) the date(s) of the Class Contract(s) or any of its amendments and the royalty account number(s) from your royalty statement(s); (6) a sentence certifying that you are a Class Member; and (7) a statement that you "request to be excluded from the class settlements in the SME Action and the BMG Action." You must personally sign your written "opt-out" statement and mail it postmarked by , 2012 to the following address:
SME and Arista Music Class Settlements EXCLUSIONS P.O. Box City, ST ZIP
As to each Class Contract, Requests for Exclusion shall be valid only if submitted on behalf of all Class Members who are parties to such Class Contract.
If you meet the deifnition of a Class Member and you do not opt out, you will be bound to the terms of the settlement(s) by the judgment of the Court.
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If you opt out, you will not get any settlement payment, you cannot object to the settlements, and you will not be bound to the terms of the settlement(s) by the judgment of the Court.
Defendants may withdraw from and terminate the Settlements if certain threshold levels of persons who would otherwise be Class Members timely and validly request exclusion from the Classes.
Object to the Settlements. If you are a Class Member, you may remain a Class Member, but object to the terms of the settlements. You may object to all or any portion of a settlement at a Settlement Hearing, but you must first submit your objections in writing. All objections must include: (1) your name, address and telephone number; (2) the date(s) of the Class Contract(s) or any of its amendments and the royalty account number(s) from your royalty statement(s); (3) a sentence confirming, under penalty of perjury, that you believe you are a Class Member; (4) the factual basis and legal grounds for your objection; (5) the identity of any witnesses whom you may call to testify at a Settlement Hearing; and (6) copies of any exhibits you intend to offer into evidence at a Settlement Hearing. To be considered, objections must be filed with the Court and mailed to the lawyers handling the case for each side postmarked no later than
, 2012 at the following addresses:
COURT CLASS COUNSEL DEFENSE COUNSEL
Clerk of the Coutr United States District Court for the Southern District of New York Daniel Patrick Moynihan United States Courthouse
Brian Caplan Caplan & Ross, LLP 270 Madison Avenue, 13 th
Jonathan M. Sperling Covington & Burling LLP The New York Times Building
Floor 620 Eighth Avenue New York, NY 10016 New York, NY 10018-1405
500 Pearl Street New York, NY 10007-1312 Benjamin Y. Kaufman
Milberg LLP One Penn Plaza New York, NY 10119-0165
You have the right to consult with your own attorney, at your own expense, before deciding how best to proceed.
What Claims Will Be Released By These Settlements?
If the settlements receive final approval from the Court, the settlements will be legally binding on all Class Members, including Class Members who object. If you, or someone acting on your behalf, are currently litigating claims against SME or Arista or the other Released Parties, you will be barred from pursuing the claims released by these settlements unless you validly "opt out" as described above. The full terms of the release, which will bind all Class Members as to certain claims against SME or Arista and the other Released Parties, are set forth in the
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Stipulations on file with the Court and available online at [www. .com]. In summary, Class Members will release claims that any past, present, or future Sales in the United States of permanent digital downloads or ringtones of sound recordings owned by SME or Arista (including its unincorporated divisions and business units) or its subsidiaries involve a lease or license of such sound recordings for purposes of calculating royalties or other payments to any Class Member, or that SME or Arista otherwise should calculate royalties on Sales in the United States of permanent digital downloads or ringtones of recordings attributable to Class Contracts under royalty provisions other than those that SME or Arista currently apply to such Sales; provided, however, that this release shall not in any way impair or restrict the rights to enforce the terms of the Settlement and is without prejudice to any other rights or audit rights not involving those claims. Except as expressly provided in connection with the Prospective Settlement Relief, nothing in this release shall be deemed to terminate, modify or cancel any provision of any Class Contract, each of which shall otherwise continue in full force and effect in accordance with its terms. See the Stipulations for the precise release language. If you are currently litigating claims against SME or Arista or the other Released Parties, speak to your lawyer in that matter immediately.
MORE INFORMATION IS AVAILABLE
This Notice is only a summary of the settlements and the Stipulations. If you have questions regarding the settlements, or would like to review a copy of the Stipulations, please visit the settlement website, [www. .com], contact Class Counsel, or write to:
SME and Arista Music Class Settlements P.O. Box City, ST ZIP
You may also review the Court's file during regular court hours at:
U.S. District Court, Southern District of New York 500 Pearl Street New York, NY 10007-1312
PLEASE DO NOT TELEPHONE THE COURT, THE JUDGE, OR THE CLERK OF THE COURT.
By Order of the United States District Court, Southern District of New York
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CLAIM FORM
CLASS ACTION SETTLEMENTS
If you fail to return this Form, you may lose valuable rights under the Settlements.
You May Be Eligible for Increased iTunes Payments (or Other Permanent Digital Download or Ringtone Royalties) as Part of the Settlements of Class Action Lawsuits.
If you wish to participate in the settlement consideration, please complete, sign, and return this Form, postmarked by the later of , 2012, or 45 days after you receive a copy of your contracts in response to a timely request for them as detailed in 2 below, and mailed to [Mailing Address]
These Settlements apply to certain persons who have signed or who have rights under a contract with any record label that is now a part of Sony Music Entertainment or its subsidiaries. All such labels are referred to in shorthand on this Form as SME. If you receive royalty statements from SME, then you may be such a person. If you cannot locate a copy of your contract(s), SME will provide you a copy as detailed in 2 below.
1. Please identify the artist (individual or band), producer, or company that signed a recording contract with SME and on whose behalf you're responding.
Name:
2. DO YOU HAVE A COPY OF YOUR CONTRACT? Yes No
IF YOU DO NOT HAVE A COPY, PLEASE GO TO [www. .com I NO LATER THAN , 2012 TO REQUEST ONE.
PLEASE LOOK THROUGH YOUR CONTRACT AND ANY AMENDMENTS TO IT TO ANSWER THE FOLLOWING QUESTIONS:
3. Is the original contract or any of its amendments dated after 1975? Yes No
4. Is the original contract dated after 2001? Yes No
5. Does the contract or any of its amendments specify that the record label will pay 50% of its receipts from any licenses or leases to third parties (such as a license for a compilation album), other than film or television licenses?
Yes No
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6. Does the contract or any of its amendments specify a royalty rate for digital downloads?
Yes No I Don't Know
7. Have you audited royalties paid under the contract since 2003? Yes No I Don't Know
8. A. Are you the artist, the authorized representative of the artist, or Yes No the authorized representative of a company that signed a recording contract with SME?
B. Are you a successor-in-interest (e.g., the heir, estate, or assignee) to the artist or company that signed a recording contract with SME, or an authorized representative of a successor-in-interest to the artist or company that signed a recording contract with SME?
Yes No
Yes No C. Are you a producer that signed a contract directly with SME, or an authorized representative of such a producer? Ify ou only receive a share of an artist's royalties under a letter of direction or a contract between you and an artist, check "No."
Yes No D. Are you a successor-in-interest (e.g., the heir, estate, or assignee) to a producer that signed a contract directly with SME, or an authoirzed representative of such a successor? Ify ou only
royalties under a letter of direction or receive a share of an artist's a contract between you and a producer or artist, check "No."
If you are unsure about how to answer any question on this Form or have questions about your rights as a class Member under this Settlement, please contact Class Counsel:
Brian D. Caplan Tom Cohen Law Offices of Thomas A. Cohen 591 Redwood Highway, Suite 2320 Mill Valley, Califonria 94941
Caplan & Ross, LLP 270 Madison Avenue, 13th Floor New York, New York 10016 Telephone: (212) 973-2376 Telephone: (415) 777-1997 e-mail address: [email protected] e-mail address: [email protected]
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I affirm under penalty of perjury that the foregoing information is true and correct to the best of my information and belief.
Date:
Signature
Printed Name
Mailing Address
Email Address
Phone Number
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SUMMARY NOTICE OF PROPOSED SETTLEMENTS OF CLASS ACTIONS
To all persons entitled to royalty payments for permanent digital downloads and ringtones under contracts currently held by CBS Records or Sony Music Entetrainment ("SME") or by Arista Music, formerly known as BMG Music ("Arista"):
If you are a party to certain recording contracts currently held by CBS Records, SME, or Arista, then you may be entitled to benefits under these class action settlements.
The United States District Court for the Southern District of New York authorized this Notice.
This is not a solicitation from a lawyer.
This is only a summary of the Notice. The Notice and the Claim Form are being mailed to all royalty account statement recipients. If you did not receive a copy of the Notice and the Claim Form, please visit [www. .com] or call toll-free 1- - - to obtain copies.
Settlements are proposed for two class action lawsuits (Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF) (the "SME Action") and Youngbloods v. BMG Music, 07 Civ. 2394 (GBD) (KNF) (the "BMG Action")) asserting breach of contract claims relating to royalty payments due to Class Members for digital download and ringtone compensation. SME and Arista deny all allegations of wrongdoing and have asserted many defenses. The settlements are not an admission of wrongdoing.
The proposed settlements (1) make $7.95 million available to all Class Members in connection with sales in the U.S. of permanent digital downloads and ringtones through December 31, 2010 and (2) provide for an increase in the royalty rate for certain Class Members for such sales atfer January 1, 2011.
Who is Affected by these Class Actions?
You are a Class Member if you: (a) are a party to a Class Contract (defined below) and (b) did not provide SME or Arista with a release of claims relating to payment of royalties on downloads or ringtones covering the entire period from January 1, 2004 through December 31, 2010.
"Class Contract" means a contract dated between January 1, 1976 and December 31, 2001 (the "Class Period") that (i) was entered into with CBS Records or SME or with BMG Music (now known as Arista), including their unincorporated divisions and business units, their United States subsidiaries as of July 2004, and any predecessor in interest to any of them; (ii) is currently held by SME or Arista, including their unincorporated divisions and business units and United States subsidiaries; (iii) contains a clause providing that SME or Arista will pay to such Class Member 50% of SME's or Arista's net receipts in respect of any Master Recording leased or licensed by SME or Arista to a third party (a "Net Receipts Provision"); (iv) does not contain a clause capping the amount to be paid under the Net Receipts Provision, such as a clause limiting payments under the Net Receipts Provision to the amount that would be paid under another royalty provision contained in the contract; (v) does not contain an express rate for digital exploitations other than a so-called "Audiophile" or "New Technology" provision; and (vi) was
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not modified to include an express rate for digital exploitations or to make any change to the Net Receipts Provision.
To determine whether you are a Class Member, you should review your contract(s) and any amendments . If you do not have your contract or any of its amendments, you may request a copy through the settlement website at [www. .com].
What Can Class Members Get From the Proposed Settlements?
1. Past Settlement Relief. All Class Members who submit a valid Claim Form will get a share of $7.95 million in settlement funds, allocated based on their permanent digital downloads sold in the U.S. on Apple's iTunes Store through December 31, 2010.
2. Prospective Settlement Relief. Certain Class Members who submit a valid Claim Form will get an additional 3% royalty for permanent digital downloads and ringtones sold in the U.S. after January 1, 2011.
How Do You Receive a Benefit?
Instructions on how to qualify and submit a Claim Form are available in the Notice and posted at the settlement website ([www. .com]) or by calling toll-free 1- - - , or writing to SME and Arista Music Class Settlements, P.O. Box , City, ST ZIP.
What Are Your Other Options?
If you are a Class Member and you don't want to receive a payment as described above and you don't want to be legally bound by the settlements, you must exclude yourself by
, 2012, or you won't be able to sue, or continue to sue, SME or Arista about the legal claims in these cases. If you exclude yourself, you can't receive a payment under these settlements. If you remain a Class Member, you may object to the settlements by
, 2012. The Notice describes how to exclude yourself or object.
The Court will hold hearings in these cases on , 2012, to consider whether to approve the settlements. The Court will also consider Class Counsel's motion for attorneys' fees and expenses and for service awards to the Class Representatives. You may appear at the hearings, but you don't have to.
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
ELMO SHROPSHIRE, INDIVIDUALLY AND AS A MEMBER OF "ELMO & PATSY"; ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, 06 Civ. 3252 (GBD) (KNF)
Plaintiff, ECF CASE
-against-
SONY MUSIC ENTERTAINMENT, A Delaware General Partnership,
Defendant
ORDER AND FINAL JUDGMENT
On the day of , 2012, a hearing having been held before this
Court to determine: (1) whether the terms and conditions of the Stipulation and Agreement of
Settlement dated March 7, 2012 (the "Stipulation") are fair, reasonable, and adequate for the
settlement of all claims asserted by the Class against the Defendant in the Third Amended
Complaint now pending in this Court under the above caption, including the release of the
Defendant and the Released Parties, and should be approved; (2) whether judgment should be
entered dismissing the Third Amended Complaint with prejudice and without costs in favor of
the Defendant and as against all persons or entities who are members of the Class herein who
have not requested exclusion therefrom; (3) whether to approve the Plan of Allocation as a fair
and reasonable method to allocate the settlement proceeds among the members of the Class; and
(4) whether and in what amount to award Class Counsel attonreys' fees and reimbursement of
expenses. The Court having considered all matters submitted to it at the hearing and otherwise;
and it appearing that a notice of the hearing substantially in the form approved by the Court was
Case 1:06-cv-03252-GBD-KNF Document 94-2 Filed 03/07/12 Page 27 of 37
mailed to all Sony Music Entertainment ("SME") royalty recipients, at the respective addresses
set forth in SME's records, and that a summary notice of the hearing substantially in the form
approved by the Court was published in Billboard magazine pursuant to the specifications of the
Court; and the Court having considered and determined the fairness and reasonableness of the
Settlement, the Plan of Allocation, and the award of attorneys' fees and expenses requested; and
all capitalized terms used herein having the meanings as set forth and defined in the Stipulation.
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. The Court has jurisdiction over the subject matter of the Action, Plaintiff, all
Class Members, and Defendant.
2. The Court finds that the prerequisites for a class action under Federal Rules of
Civil Procedure 23 (a) and (b)(3) for settlement purposes have been satisfied in that: (a) the
number of Class Members is so numerous that joinder of all members thereof is impracticable;
(b) there are questions of law and fact common to the Class; (c) the claims of the Class
Representative are typical of the claims of the Class he seeks to represent; (d) the Class
Representative and Class Counsel have and will fairly and adequately represent the interests of
the Class; (e) the questions of law and fact common to the members of the Class predominate
over any questions affecting only individual members of the Class; and (f) a class action is
superior to other available methods for the fair and efficient adjudication of the controversy.
3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereby
finally certifies this action as a class action for settlement purposes on behalf of all recording
artists and producers who (a) are parties to a contract dated between January 1, 1976 and
December 31, 2001 (the "Class Period") that (i) was entered into with CBS Records or Sony
Music Entertainment, including their unincorporated divisions and business units, their United
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States subsidiaries as of July 2004, and any predecessor in interest to any of them; (ii) is
currently held by Sony Music Entertainment, including its unincorporated divisions and business
units and United States subsidiaries; (iii) contains a clause providing that SME will pay to such
Class Member 50% of SME's net receipts in respect of any Master Recording leased or licensed
by SME to a third patry (a "Net Receipts Provision"); (iv) does not contain a clause capping the
amount to be paid under the Net Receipts Provision, such as a clause limiting payments under
the Net Receipts Provision to the amount that would be paid under another royalty provision
contained in the contract; (v) does not contain an express rate for digital exploitations other than
a so-called "Audiophile" or "New Technology" provision; and (vi) was not modified to include
an express rate for digital exploitations or to make any change to the Net Receipts Provision (a
"Class Contract"); and (b) did not provide SME with a release of claims relating to payment of
royalties on downloads or ringtones covering the entire period from January 1, 2004 through
December 31, 2010. Excluded from the Class are the Defendant and any person, trust, firm,
corporation, or other entity affiliated with or related to the Defendant. [Also excluded from the
Class are the persons and/or entities who submitted Requests for Exclusion as listed on
Exhibit 1 annexed hereto OR No timely and valid Requests for Exclusion from the Class
were received.]
4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereby
finally certifies Plaintiff Elmo Shropshire as Class Representative for settlement purposes.
5. Notice of the pendency of this Action as a class action and of the proposed
Settlement was given to all Class Members who could be identified with reasonable effort. The
form and method of notifying the Class of the pendency of the action as a class action and of the
terms and conditions of the proposed Settlement met the requirements of Rule 23 of the Federal
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Rules of Civil Procedure, the Class Action Fairness Act of 2005, 28 U.S.C. § 1715, due process,
and any other applicable law, constituted the best notice practicable under the circumstances, and
constituted due and sufficient notice to all persons and entities entitled thereto. Defendant's
Counsel has ifled with the Court proof of mailing of the Notice and Claim Form and proof of
publication of the Publication Notice. Defendant's Counsel has also filed with the Court proof of
compliance with the Class Action Fairness Act of 2005.
6. The Settlement is approved as fair, reasonable, and adequate, and the Class
Members and the parties are directed to consummate the Settlement in accordance with the terms
and provisions of the Stipulation.
7. The Third Amended Complaint is hereby dismissed with prejudice and without
costs, except as provided in the Stipulation, as against the Defendant.
8. Plaintiff, the Class, and each Class Member on behalf of themselves, their heirs,
executors, administrators, attorneys, successors and assigns, and any persons they represent,
hereby fully, finally and forever release, relinquish, and discharge the Released Parties with
respect to each and every Released Plaintiff Claim and shall forever be enjoined from
prosecuting any of the Released Plaintiff Claims with respect to each and every Released Party
and covenant not to sue any of the Released Parties with respect to any of the Released Plaintiff
Claims.
(a) "Released Parties" means Sony Music Entertainment, including its
unincorporated divisions and business units, and any of its past, present, or future parent entities,
associates, afifliates, or subsidiaries and each and all of their past, present and future officers,
directors, stockholders, principals, employees, advisors, agents, attonreys, financial or
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investment advisers, consultants, lenders, insurers, investment bankers, commercial bankers,
representatives, affiliates, associates, parents, subsidiaries, joint ventures, general and limited
partners and partnerships, heirs, executors, trustees, personal representatives, estates,
administrators, trusts, predecessors, successors and assigns.
(b) "Released Plaintiff Claims" shall collectively mean any and all actions,
suits, claims, demands, rights, liabilities and causes of action, of every nature and description
whatsoever, whether individual, class, derivative, representative, legal, equitable, or any other
type or in any other capacity, or concealed or hidden, that were asserted or that could have been
asserted (including without limitation claims for negligence, gross negligence, breach of
contract, breach of duty of care and/or breach of duty of loyalty, fraud, breach of fiduciary duty,
or violations of any state or federal common law, statutes, rules, or regulations), including both
known claims and Unknown Claims, that the Plaintiff, the Settlement Class, any Class Member
or any of them in the past had, now has, or might in the future have against the Released Parties
or any of them on the basis of, connected with, or in any way arising out of any allegation that
any past, present, or future Sales in the United States of permanent digital downloads or
ringtones of sound recordings owned by SME (including its unincorporated divisions and
business units) or its subsidiaries involves a lease or license of such sound recordings for
purposes of calculating royalties or other payments to any Class Member, or that SME otherwise
should calculate royalties on Sales in the United States of permanent digital downloads or
ringtones of recordings attributable to Class Contracts under royalty provisions other than those
that it currently applies to such Sales; provided, however, that the definition of Released Plaintiff
Claims shall not in any way impair or restrict the rights to enforce the terms of the Settlement.
Except as expressly provided in paragraph 16(b) of the Stipulation, nothing herein shall be
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deemed to terminate, modify or cancel any provision of any Class Contract, each of which shall
otherwise continue in full force and effect in accordance with its terms. The release of the
"Released Plaintiff Claims" pursuant to this Settlement is without prejudice to any other rights or
audit rights not involving those claims.
9. Defendant and each of the other Released Parties on behalf of themselves, their
heirs, executors, administrators, attorneys, successors and assigns, and any persons they
represent, hereby fully, finally and forever release, relinquish, and discharge the Plaintiff, any of
the other Class Members, or their attorneys with respect to each and every Released Defendant
Claim and shall forever be enjoined from prosecuting the Plaintiff, any of the other Class
Members, or their attonreys with respect to each and every Released Defendant Claim.
(a) "Released Defendant Claims" means any and all actions, suits, claims,
demands, rights, liabilities and causes of action, of every nature and description whatsoever,
whether individual, class, representative, legal, equitable, or any other type or in any other
capacity, or concealed or hidden, that were asserted or that could have been asserted (including
without limitation claims for negligence, gross negligence, breach of contract, breach of duty of
care and/or breach of duty of loyalty, fraud, breach of fiduciary duty, or violations of any state or
federal common law, statutes, rules, or regulations), including both known claims and Unknown
Claims, that the Defendant or any of the other Released Parties in the past had, now has, or might
in the future have against the Plaintiff, any of the other Class Members, or their attonreys, arising
from the institution, prosecution, or settlement of the Action; provided, however, that the
definition of Released Defendant Claims shall not in any way impair or restrict anyone's rights
to enforce the terms of the Settlement.
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10. Notwithstanding the provisions of Ili 8 and 9 of this Order and Final Judgment, (i)
in the event that any of the Released Parties asserts against Plaintiff, any other Class Member or
Class Counsel, any claim that is a Released Defendant Claim, then Plaintiff, such Class Member
or Class Counsel shall be entitled to use and assert such factual matters included within the
Released Plaintiff Claims against such Released Party only in defense of such claim but not for
the purposes of affirmatively asserting any claim against any Released Party; and (ii) in the event
that Plaintiff, any other Class Member or Class Counsel asserts against any Released Parties any
Released Plaintiff Claims, such Released Parties or their respective counsel shall be entitled to
use and assert such factual matters included within the Released Defendant Claims against such
claimant only in defense of such claim but not for the purposes of affirmatively asserting any
claim against any such claimant.
11. Neither this Order and Final Judgment, the Stipulation, including any exhibits, nor
any of its terms and provisions, nor any of the negotiations or proceedings connected with it, nor
any of the documents or statements referred to therein shall be:
(a) offered or received against Defendant or any Released Party as evidence
of, or construed as or deemed to be evidence of, any presumption, concession, or admission by
Defendant or any Released Party of the truth of any fact alleged by Plaintiff or the validity of any
claim that has been or could have been asserted in the Action or in any litigation, or the
deficiency of any defense that has been or could have been asserted in the Action or in any
litigation, or of any liability, negligence, fault, or wrongdoing of Defendant or any Released
Party;
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(b) offered or received against Defendant or any Released Party as evidence
of a presumption, concession, or admission of any fault, misrepresentation, or omission with
respect to any statement or written document approved or made by Defendant or any Released
Party, or against Plaintiff and the Class as evidence of any infirmity in their claims;
(c) offered or received against Defendant or any Released Party as evidence
of a presumption, concession, or admission of any liability, negligence, fault or wrongdoing, or
in any way referred to for any other reason as against any of the parties to this Stipulation, in any
other civil, criminal, or administrative action or proceeding, other than such proceedings as may
be necessary to effectuate the provisions of this Stipulation; provided, however, that if this
Stipulation is approved by the Court, Defendant or any Released Party may refer to it to
effectuate the liability protection granted hereunder;
(d) construed against Defendant or any Released Party or Plaintiff and the
Class as an admission or concession that the consideration to be given hereunder represents the
amount that could be or would have been recovered atfer trial; or
(e) construed as or received in evidence as an admission, concession or
presumption against Plaintiff or any of the Class Members that any of their claims are without
merit, or that any defenses asserted by Defendant has any merit, or that damages recoverable
under the complaints and amended complaints filed in the Action would not have exceeded the
Past Settlement Relief and Prospective Settlement Relief.
12. The Plan of Allocation is approved as fair and reasonable, and Defendant's
Counsel and Class Counsel are directed to administer the Stipulation in accordance with its terms
and provisions.
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13. Class Counsel are hereby awarded attorneys ' fees and expenses in the amount of
$ , which sum the Court finds to be fair and reasonable, to be
paid in accordance with the terms of the Stipulation.
14. Plaintiff Elmo Shropshire is hereby awarded $ for Plaintiff s
service as a class representative, which sum the Court finds to be fair and reasonable, to be paid
in accordance with the terms of the Stipulation.
15. In making this award of attorneys' fees and reimbursement of expenses, the Court
has considered and found that:
(a) The Settlement provides Past Settlement Relief of $4,196,790 in cash and
credits and $164,580 in cash and provides Prospective Settlement Relief and numerous Class
Members who submit acceptable Claim Forms will benefit from the Settlement created by Class
Counsel;
(b) The Notice to Class Members indicated that Class Counsel were moving
for attorneys' fees and expenses in the amount $1,453,790 and [ objections were
filed against the terms of the proposed Settlement or the ceiling on the fees and expenses
requested by Class Counsel contained in the Notice;
(c) Class Counsel have conducted the litigation and achieved the Settlement
with skill, perseverance and diligent advocacy;
(d) The action involves complex factual and legal issues and was actively
prosecuted over more than five years and, in the absence of a settlement, would involve further
lengthy proceedings with uncertain resolution of the complex factual and legal issues;
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(e) Had Class Counsel not achieved the Settlement there would remain a
significant risk that the Class may have recovered less or nothing from the Defendant;
(0 Class Counsel have devoted over hours, with a lodestar value of
$ , to achieve the Settlement; and
(g) The amount of attorneys' fees and expenses awarded are fair and
reasonable and consistent with awards in similar cases.
16. Exclusive jurisdiction is hereby retained over the parties and the Class Members
for all matters relating to this Action, including the administration, interpretationeffectuation or
enforcement of the Stipulation and this Order and Final Judgment, and including any application
for fees and expenses incurred in connection with administering and distributing the settlement
proceeds to the members of the Class.
17. Without further order of the Court, the parties may agree to reasonable extensions
of time to carry out any of the provisions of the Stipulation.
18. There is no just reason for delay in the entry of this Order and Final Judgment and
immediate entry by the Clerk of the Court is expressly directed pursuant to Rule 54 (b) of the
Federal Rules of Civil Procedure.
Dated: New York, New York , 2012
Honorable George B. Daniels UNITED STATES DISTRICT JUDGE
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EXHIBIT 1
List of Persons and Entities Requesting Exclusion from the Class in Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF)
The following persons and entities have properly requested exclusion from the Class in Shropshire v. Sony Music Entertainment, 06 Civ. 3252 (GBD) (KNF) and are not members of the Class bound by this Order and Judgment:
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