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Weil Obtains Final Approval of Favorable Nationwide Class Action Settlement for Local Television Industry in Antitrust Lawsuit Against the SESAC Performance Rights Organization

On February 19, 2015, the U.S. District Court for the Southern District of New York entered a final judgment approving the settlement of a significant antitrust class action lawsuit challenging the licensing practices of SESAC, one of three performance rights organizations (PROs) in the United States. In its order, the Court was effusive in its praise of the “highly skilled” Weil team that represented the named plaintiffs – a group of Hoak, Meredith, and Scripps local television stations – and served as class counsel for purposes of the settlement, which the Court noted “carries the promise of peace for a generation between SESAC and the television stations” and serves as “a significant landmark in the long history of litigation between PROs and prospective licensees.” 

The lawsuit was funded by the industry’s Television Music License Committee and brought on behalf of a putative nationwide class of local television broadcasters. The plaintiffs alleged that SESAC, a PRO unconstrained by any of the protections built into the ASCAP and BMI consent decrees with the Antitrust Division of the U.S. Department of Justice, has wielded its monopoly power over the copyrighted works it licenses to extract supra-competitive fees, and to deny television licensees any meaningful option to an all-or-nothing blanket license. This foreclosure of competition and anticompetitive conduct by SESAC and certain of its affiliates in the licensing of SESAC music were challenged as violations of Sections 1 and 2 of the Sherman Antitrust Act, prohibiting, respectively, unreasonable restraints of trade, monopolization, and a conspiracy to monopolize.

The Weil team successfully defeated two attempts by SESAC to dismiss this lawsuit. First, in March 2011, the district court denied SESAC’s motion to dismiss. Then, in March 2014, the district court denied, with limited exception, SESAC’s motion for summary judgment stating that “the record evidence is sufficient to support a verdict in plaintiff’s favor.” In approving the class action settlement, the Court remarked that the “plaintiffs amassed formidable evidence on which a jury could have found liability.”

With the case set for a jury trial this March, the parties entered into a settlement in October 2014 that provides substantial industry-wide relief. SESAC will be bound through 2035 by some of the core conduct restrictions that constrain ASCAP and BMI. The settlement also provides monetary relief — SESAC paid $58.5 million into a settlement fund, including attorneys’ fees and costs, which the Court remarked was a “very substantial hit to SESAC.” The Court ultimately concluded that “the recovery here is highly reasonable” and the “uniform acceptance of the settlement terms” by a “sophisticated” class “supports approval of the settlement.”

The Court’s decision marks the successful end of this lawsuit at the intersection of antitrust and IP law where by “every metric—the number of plaintiff stations, the number of SESAC affiliates, the duration of the case, the volume of document discovery, the number of depositions taken, the length of expert reports, and the number of briefs filed—underscores the magnitude and scale of the litigation.” The Court specifically highlighted Weil’s “vigorous, effective, and creative” work on this case and “significant experience in litigating complex class actions brought under the antitrust laws as well as in the music licensing industry.” Further, the Court praised Weil’s “achievement in obtaining valuable recompense and forward-looking protections for its clients” as “particularly noteworthy given the caliber and vigor of its adversaries” and the fact that, “unlike in many class actions, the case against SESAC was not built on following, or piggybacking on regulatory investigation or settlement.” In sum, the Court concluded that the members of the Weil team “were truly the authors of the favorable outcome for the class.”

The Weil team consists of partners Steven Reiss, Bruce Rich, Benjamin Marks, and Eric Hochstadt in New York and partner Carrie Anderson in Washington, D.C., as well as associates Kaj Rozga, Jane Cooper, and Joy Dineo in New York, and Meaghan Thomas-Kennedy in Silicon Valley. During the course of the lawsuit, the Weil team also received significant contributions from current associates Kristen Murphy, Cheri Bessellieu, and Wendy Fu.