UMG Recordings, Inc. et al v. Veoh Networks, Inc. et al, No. 2:2007cv05744 - Document 54 (C.D. Cal. 2008)
Court Description: NOTICE OF MOTION AND MOTION for Leave to Amend Complaint to Add Defendants filed by Plaintiffs Songs of Universal, Inc., Universal-Polygram International Publishing, Inc., Rondor Music International, Inc., Universal Music - MGB NA LLC, UMG Recordings, Inc., Universal Music - Z Tunes LLC, Universal Music - MBG Music Publishing Ltd., Universal Music Corp.. Motion set for hearing on 7/7/2008 at 10:00 AM before Judge A. Howard Matz. (Attachments: # 1 Proposed First Amended Complaint, # 2 Proposed Order granting UMG's motion for leave to amend complaint to add defendants)(Marenberg, Steven)
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UMG Recordings, Inc. et al v. Veoh Networks, Inc. et al Doc. 54 1 Steven A. Marenberg (101033) (smarenberg@irell.com) 2 3 4 5 6 Elliot Brown (150802) (ebrown@irell.com) Brian Ledahl (186579) (bledahl@irell.com) Benjamin Glatstein (242034) (bglatstein@irell.com) IRELL & MANELLA LLP 1800 Avenue of the Stars, Suite 900 Los Angeles, California 90067-4276 Telephone: (310) 277-1010 Facsimile: (310) 203-7199 7 Attorneys for Plaintiffs 8 9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 12 WESTERN DIVISION UMG RECORDINGS, INC., et al., 13 Plaintiffs, 14 15 v. 16 17 VEOH NETWORKS, INC., 18 Defendant. 19 20 21 22 23 24 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV-07-05744 AHM (AJWx) NOTICE OF MOTION AND MOTION FOR LEAVE TO AMEND COMPLAINT TO ADD DEFENDANTS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF FILED CONCURRENTLY HEREWITH: DECLARATION OF ANJULI MCREYNOLDS; [PROPOSED] FIRST AMENDED COMPLAINT; [PROPOSED] ORDER Magistrate: Hon. A. Howard Matz Date: July 7, 2008 Time: 10:00 a.m. Courtroom: 14 Discovery Cutoff: January 12, 2009 Pretrial Conference: April 6, 2009 Trial Date: April 21, 2009 25 26 27 28 1874404.5 06 Dockets.Justia.com 1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD: 2 PLEASE TAKE NOTICE that on July 7, 2008, at 10:00 a.m., or as soon 3 thereafter as this matter can be heard before the Honorable A. Howard Matz of the 4 United States District Court for the Central District of California, at 312 N. Spring 5 Street, Courtroom 14, Los Angeles, CA, 90012, Plaintiffs (collectively “UMG”) will 6 move and hereby move for leave to amend UMG’s complaint to add Shelter Capital 7 Partners, LLC, Shelter Venture Fund, L.P., Spark Capital, LLC, Spark Capital, L.P., 8 The Tornante Company, LLC, and Goldman Sachs Group, Inc., as defendants. 9 UMG’s counsel and Veoh’s counsel met and conferred regarding UMG’s 10 intent to file this motion on May 22, 2008. Veoh said it will not stipulate to the 11 amendment, and will oppose the motion. 12 This motion is based on the attached memorandum of points and authorities 13 in support thereof, the declaration of Anjuli McReynolds in support thereof, and all 14 files and pleadings in this action. 15 Dated: June 16, 2008 16 Respectfully Submitted, IRELL & MANELLA LLP 17 18 By: 19 20 /s Steven A. Marenberg Attorneys for Plaintiffs UMG RECORDINGS, INC.; UNIVERSAL MUSIC CORP.; SONGS OF UNIVERSAL, INC.; UNIVERSAL-POLYGRAM INTERNATIONAL PUBLISHING, INC.; RONDOR MUSIC INTERNATIONAL, INC.; UNIVERSAL MUSIC – MGB NA LLC; UNIVERSAL MUSIC – Z TUNES LLC; UNIVERSAL MUSIC – MBG MUSIC PUBLISHING LTD. 21 22 23 24 25 26 27 28 1874404.5 06 ii MEMORANDUM OF POINTS AND AUTHORITIES 1 2 I. PRELIMINARY STATEMENT 3 In this motion, Plaintiffs (collectively “UMG”) seek leave of Court to file a 4 First Amended Complaint (“FAC”) for the purpose of adding as defendants certain 5 firms that own, control, and operate defendant Veoh Networks, Inc. Specifically, 6 UMG’s FAC names Shelter Capital Partners, LLC, Shelter Venture Fund, L.P. 7 (collectively “Shelter Capital”), Spark Capital, LLC, Spark Capital, L.P. 8 (collectively “Spark Capital”), The Tornante Company, LLC (“Tornante”), and 9 Goldman Sachs Group, Inc. (“Goldman Sachs”) as defendants. 10 As alleged in the proposed FAC (based on preliminary discovery in the case), 11 each of the additional defendants has actively enabled, facilitated, and contributed to 12 the infringing operations of veoh.com. They have done so both by supplying 13 millions of dollars in operating capital (without which, Veoh would long ago have 14 ceased operations), and by demanding and obtaining seats on Veoh’s Board of 15 Directors, from which they exercise majority control over Veoh and make all 16 material decisions regarding its operations. These decisions include, for example, 17 deciding on the types of content that Veoh makes available – copyrighted music 18 videos, but not adult content – and deciding not to implement filtering technology 19 that could avoid or curtail infringement.1 The FAC further alleges (as did the 20 original complaint) that the presence of infringing copies of UMG’s copyrighted 21 works on Veoh’s internet site and “client” software draws users, and therefore 22 advertisers and revenue, to Veoh. The proposed additional defendants, Shelter 23 Capital, Spark Capital, Tornante, and Goldman Sachs, reap financial benefits from 24 Veoh’s infringement. 25 1 As UMG made clear in its original complaint, Rule 26(f) Report, and statements to the Court during the scheduling conference, UMG chose not to assert 27 claims against Veoh’s owners until UMG could conduct discovery to ascertain the extent of their facilitation of, and complicity in, Veoh’s infringement. Preliminary 28 discovery has now confirmed facts underscoring the propriety of claims against these firms, and UMG therefore now seeks leave to amend its complaint. 26 1874404.5 06 1 Good cause exists to grant this motion under the extremely liberal standards 1 2 of Rule 15(a). See Fed. R. Civ. P. 15(a)(2) (stating that leave to amend “shall be 3 freely given when justice so requires”); see also Owens v. Kaiser Found. Health 4 Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001). The allegations of the FAC, if 5 proven, would render Shelter Capital, Spark Capital, Tornante and Goldman Sachs 6 liable for vicarious and contributory copyright infringement, at the least. See, e.g., 7 Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996); UMG 8 Recordings, Inc. v. Bertelsmann AG, 222 F.R.D. 408 (N.D. Cal. 2004). Other factors considered by courts in evaluating motions to amend under Rule 9 10 15(a) similarly militate in favor of permitting amendment here. As noted (see 11 footnote 1, supra), UMG has acted cautiously, responsibly and in good faith in 12 waiting for the results of preliminary discovery before adding Shelter Capital, Spark 13 Capital, Tornante and Goldman Sachs (but not other owners of Veoh) as defendants. 14 Likewise, neither Veoh nor the proposed new defendants can credibly claim any 15 unfair prejudice as a result of the proposed amendment. Discovery is still at an early 16 stage in this case, and the proposed amendment has been brought within the time 17 period set by the Court for adding parties. Indeed, given that the applicable statutes 18 of limitations have not yet even run, UMG could simply file new, individual cases 19 against each of the proposed additional defendants. Instead, adding them to the 20 current case ensures that the claims against Veoh and its owners will be litigated in 21 an efficient and non-duplicative manner. Accordingly, UMG respectfully submits that, pursuant to Rule 15(a)(2), the 22 23 Court grant the instant motion to amend. 24 II. FACTUAL BACKGROUND 25 This is an action for direct, contributory and vicarious copyright infringement 26 and for inducement of copyright infringement brought by UMG against defendant 27 Veoh Networks, Inc. (“Veoh”). UMG’s claims arise out of Veoh’s unauthorized 28 exploitation of UMG’s copyrighted materials on its website, www.veoh.com, and 1874404.5 06 2 1 through the use of its “VeohTV” player software. Much of the content that Veoh 2 makes available for streaming and downloading is not so-called “user-generated 3 content,” but is the stolen intellectual property of UMG and others. See Complaint 4 ¶¶ 2-4. At the time this lawsuit was filed, Veoh knew that thousands of UMG’s 5 copyrighted works -- music videos embodying UMG’s copyrighted sound 6 recordings and musical compositions -- were available for viewing and download at 7 veoh.com and through the VeohTV player. See id. ¶ 13, 26. Veoh did nothing to 8 prevent this infringement; indeed it encouraged it. See id. ¶ 27. 9 As UMG alleged in its Complaint, Veoh attracted tens of millions of dollars 10 of financial support from various investors, including Shelter Capital, Spark Capital, 11 Tornante and Goldman Sachs. Id. ¶ 14. All of these companies benefit financially 12 from Veoh’s infringing acts. Id. Further, as a condition to their contribution of 13 money to Veoh, each of these firms secured representation on the Veoh Board of 14 Directors and the assurance that all important operational decisions would be made 15 at the Board level. Id. 16 When UMG first filed this case, it expressly reserved the right in its original 17 complaint to add additional potential defendants, including Veoh’s 18 investors/owners, once the full nature and extent of their contribution to, and 19 enabling of, Veoh’s infringing conduct was known. Id. Preliminary discovery has 20 made the nature and extent of these firms’ facilitation of Veoh’s infringement of 21 UMG’s copyrighted works sufficiently clear to support UMG’s addition of the 22 investors/owners as defendants. Each of these firms, both through financial 23 investments and seats on Veoh’s Board of Directors, have the right and ability to 24 supervise and/or control the infringing conduct of Veoh and its users, and materially 25 contributed to that infringing conduct. Evidence exists that each of these firms 26 knew that veoh.com was riddled with copyrighted content without licenses, yet they 27 did nothing either to remedy the infringement or ensure that the funding that they 28 were providing did not constitute, in essence, the lifeblood for further infringement. 1874404.5 06 3 1 Instead of exercising the control they enjoyed to eliminate infringement, Spark 2 Capital, Shelter Capital, Tornante and Goldman Sachs have chosen to pursue 3 infringement as a business plan and reap the benefits of Veoh’s infringement as it 4 attracts additional users to veoh.com, thereby generating not only additional 5 revenues through advertising, but additional value to the company.2 UMG therefore 6 respectfully seeks leave, through the instant motion, to amend its Complaint to add 7 claims against the additional defendants. 8 III. UMG’S PROPOSED AMENDMENT MEETS THE REQUIREMENTS 9 OF RULE 15 10 UMG seeks leave to amend its complaint to allege claims for vicarious 11 copyright infringement against additional defendants—Shelter Capital, Spark 12 Capital, Tornante, and Goldman Sachs—who have invested in, and taken a 13 substantial role in the operation of, Veoh (hereinafter, the “Veoh Owner14 Defendants”). As the Court recognized during the March 17, 2008 scheduling 15 conference, Rule 15(a) sets a liberal standard for amendment. Declaration of Anjuli 16 McReynolds (“McReynolds Decl.”), ¶ 5, Ex. 4 (Transcript of Scheduling 17 Conference). Rule 15(a)(2) states that such “leave shall be freely given when justice 18 so requires.” This policy is “to be applied with extreme liberality.” Owens v. 19 Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001) (quoting 20 Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)). 21 Courts generally consider four factors when evaluating a plaintiff’s request to 22 amend a complaint: (1) bad faith or dilatory motive; (2) undue delay; (3) prejudice 23 to the opposing party; and (4) futility of the proposed amendment. Foman v. Davis, 24 371 U.S. 178, 182 (1962); Lockheed Martin Corp. v. Network Solutions, Inc., 194 25 26 2 Although not required to do so, UMG has specifically alleged facts relating to the timing and significance of each of the various new defendants’ investments in 27 Veoh, and the consequences thereof. (See FAC ¶¶ 30-32). These facts are 28 supported by documents produced in discovery or elsewhere, attached as exhibits to the McReynolds Declaration. 1874404.5 06 4 1 F.3d 980, 986 (9th Cir. 1999). Each of these four factors support UMG’s request for 2 leave to amend. 3 • UMG has shown its good faith. From the outset of this case, UMG 4 explained that it might assert claims against one or more of Veoh’s 5 owners and discussed this fact openly with the Court at the Initial 6 Status Conference. • UMG’s amendment is timely. UMG propounded discovery on Veoh’s 7 8 investors at the earliest opportunity. The Court specifically set a 9 timetable for UMG to follow for a possible amendment at the Initial Status Conference. UMG complied with this timetable. 10 11 • UMG’s amendment will not prejudice Veoh. This case is at a relatively 12 early stage of discovery. Veoh has not yet produced its documents, and 13 no depositions have been conducted. No discovery need be repeated 14 and Veoh cannot identify any prejudice from UMG’s amendment. 15 • UMG could simply file new and separate complaints against each of 16 the proposed defendants. Adding them to the existing suit merely 17 guarantees consistency and reduces the expense for all concerned. • UMG’s amendment alleges a proper claim. Veoh cannot meet the very 18 19 high burden of showing futility of UMG’s amendment. In fact, UMG 20 alleges facts showing the necessary elements of claims for vicarious 21 and contributory infringement. 22 A. UMG Acted In Good Faith And Has Timely Moved To Amend 23 The factors of “good faith” and “undue delay” substantially overlap. See, 24 e.g., Wright & Miller, Federal Practice and Procedure, § 1487 (“When the court 25 inquires into the good faith of the moving party, it typically will take account of the 26 movant’s delay in seeking the amendment.”). Courts also consider whether the 27 proposed amendment is interposed for some improper purpose, such as to affect the 28 Court’s jurisdiction or for reasons of litigation tactics. See id. (if the Court 1874404.5 06 5 1 “determines that the amendment was asserted in bad faith, as, for example, when 2 plaintiff attempts to destroy the federal court’s removal jurisdiction over the case by 3 altering the complaint so that the case will be remanded, the court may not allow the 4 amendment”). Here, Veoh cannot make any showing that UMG has acted in 5 anything but good faith in pursuing this amendment. UMG’s proposed amendment 6 will not affect this Court’s jurisdiction over this matter, and if UMG had sought 7 some tactical advantage through amendment, it hardly would have explained, in 8 advance, the potential for the amendment to both Veoh and the Court from the 9 outset of this case. 10 Specifically, in its September 4, 2007 Complaint, UMG expressly reserved 11 the right to add the Veoh Owner-Defendants as defendants once it had more 12 information about their contribution to, and facilitation of, Veoh’s infringement. 13 Complaint ¶ 14. Soon thereafter, on October 18, 2007, UMG wrote to the Veoh 14 Owner-Defendants informing them of UMG’s suit against Veoh and their potential 15 liability. McReynolds Decl., ¶ 2, Ex. 1 (October 18, 2007 letters). On February 15, 16 2008, UMG served document subpoenas upon the Veoh Owner-Defendants. See 17 id., ¶ 3, Ex. 2 (subpoenas). 18 UMG also stated in the Joint Rule 26(f) Report that “it may seek to amend its 19 complaint to add one or more of the investors in Veoh as defendants in this action, 20 depending upon information learned in discovery.” McReynolds Decl., ¶ 4, Ex. 3 21 (Joint Rule 26(f) Report at 6). During the scheduling conference with the Court on 22 March 17, 2008, counsel for UMG noted that UMG had subpoenaed the Veoh 23 Owner-Defendants, and that UMG would make an appropriate determination 24 regarding these investors after receiving discovery from them. McReynolds Decl., 25 ¶ 5, Ex. 4 (Transcript of Scheduling Conference). In light of these facts, the Court 26 set June 16, 2008, as the last day to move to amend the complaint to add new 27 parties. Id. Thereafter, discovery was delayed because the Veoh Owner-Defendants 28 withheld most of their productions pending entry of a protective order in this case. 1874404.5 06 6 1 UMG worked diligently with counsel for Veoh to obtain such agreement and an 2 Interim Protective Order was entered May 21, 2008. The Veoh Owner-Defendants 3 began producing their documents shortly thereafter, and UMG promptly undertook 4 to review that information. Now, less than one month later, UMG asks the Court for 5 leave to amend. 6 Accordingly, it is plain that UMG has acted with good faith throughout 7 regarding the potential addition of the Veoh Owner-Defendants as defendants, and 8 has not unduly delayed the instant motion to amend. See DCD Programs, Ltd. v. 9 Leighton, 833 F.2d 183, 187 (9th Cir. 1987) (finding no bad faith and affirming 10 grant of leave to amend where plaintiff sought to develop evidence of wrongful 11 conduct before asserting claims); Qualcomm, Inc. v. Motorola, Inc., 989 F. Supp. 12 1048, 1050 (N.D. Cal. 1997) (finding no undue delay where the plaintiff’s ongoing 13 investigation and discovery had revealed sufficient information upon which to base 14 new claims for relief). 15 B. Defendants 16 17 UMG’s Amendment Will Not Prejudice Veoh or the Veoh Owner- Veoh bears the burden of establishing that prejudice will result from UMG’s 18 amendment. See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th 19 Cir. 2003). Veoh cannot possibly make such a showing. As noted previously, Veoh 20 and its investors have been aware of the possibility of this amendment since UMG 21 first filed suit. No depositions have yet been conducted. Fact discovery remains 22 open until January 2009, providing ample opportunity for the additional defendants 23 to participate in any necessary discovery. No other substantive proceedings have 24 taken place that would prejudice the rights of Shelter Capital, Spark Capital, 25 Tornante or Goldman Sachs. Moreover, to date, at least two of the investor 26 defendants (Spark Capital and the Tornante Company) have been represented by the 27 same counsel who represents Veoh in this matter, further confirming that their 28 interests are aligned and have been protected. 1874404.5 06 7 1 Given the early stage of the case and UMG’s express reservation of its right 2 to amend, Veoh can point to no unfair prejudice that will result from the Court’s 3 granting of the instant motion. See ABM Indus., Inc. v. Zurich Am. Ins. Co., 237 4 F.R.D. 225, 227 (N.D. Cal. 2006) (holding that defendants were not prejudiced by 5 amendment because litigation was at an early stage, and defendants were not 6 surprised by the new factual allegations). Indeed, as noted earlier, UMG could 7 simply file separate complaints against the Veoh Owner-Defendants, if it chooses to 8 do so, and then coordinate or consolidate the cases. As such, Veoh cannot credibly 9 claim any undue prejudice from the proposed amendment. 10 D. Veoh Owner-Defendants 11 12 UMG’s Proposed Amendment States Valid Claims Against the The final factor considered by Courts under Federal Rule 15 is futility of the 13 proposed amendment. Where, as here, the amended complaint alleges a legally 14 sufficient claim for relief (vicarious and contributory infringement against the Veoh 15 Owner-Defendants), leave to amend should be granted. See Miller v. Rvkoff-Sexton, 16 Inc., 845 F.2d 209, 214 (9th Cir. 1988). A substantive evaluation of the merits of 17 UMG’s allegations, however, would be improper on a motion for leave to amend. 18 See William Schwarzer, et al., Federal Civil Procedure Before Trial § 8:422 (noting 19 that, “[o]rdinarily, courts do not consider the validity of a proposed amended 20 pleading in deciding whether to grant leave to amend.”). 21 Liability for contributory infringement of copyright lies where a party 22 “knowingly contributes to the infringing conduct of another.” Fonovisa, Inc. v. 23 Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996) (holding plaintiff’s allegation 24 that defendant “actively [strove] to provide the environment and the market [i.e., the 25 site and facilities] for counterfeit recording sales to thrive” was sufficient to state 26 contributory infringement claim); see UMG Recordings, Inc. v. Bertelsmann AG, 27 222 F.R.D. 408 (N.D. Cal. 2004) (refusing to dismiss claims for contributory 28 1874404.5 06 8 1 infringement against investors in the Napster online peer-to-peer network where the 2 plaintiffs alleged the investors were directly responsible for the infringing activity). 3 Vicarious liability for copyright infringement may be imposed where the 4 defendant (1) possesses the right and ability to supervise the infringing activity, and 5 (2) has a direct financial interest in the exploitation of the copyrighted materials. 6 See M. Nimmer & D. Nimmer, Copyright, § 12.04[A][2] (2007); Metro-Goldwyn7 Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005); Fonovisa, 76 F.3d 8 at 262-63 (holding that defendant swap meet owner had a financial interest in the 9 infringement because “sale of pirated recordings at the Cherry Auction [acted as] a 10 ‘draw’ for customers”); UMG Recordings, Inc. v. Bertelsmann AG, 222 F.R.D. 408 11 (N.D. Cal. 2004) (refusing to dismiss claims for vicarious infringement against 12 investors in the Napster online peer-to-peer network); Broadcast Music, Inc. v. 13 Hartmarx Corp., 1988 WL 128691, at *3 (N.D. Ill. Nov. 17, 1988) (holding that the 14 right to control the Board of Directors constituted control of day-to-day activities 15 and thus made investor vicariously liable for infringement). 16 As alleged by UMG in the FAC, the Owner-Defendants have actively 17 supported Veoh – both financially and operationally – in its infringing activities. 18 The Owner-Defendants supplied the funding which Veoh has used to operate its 19 business, including constructing and maintaining its hardware and software systems, 20 which not only accomplishes the direct infringement of UMG’s copyrighted works, 21 but facilitates third parties who use Veoh’s systems to infringe UMG’s copyrighted 22 works. In addition, the Veoh Owner-Defendants sought and obtained seats on 23 Veoh’s Board of Directors as a condition of their investments (indeed, they obtained 24 majority control of the Board). FAC ¶ 30-32. Through these seats, the Owner25 Defendants exercised substantial control over Veoh’s operations, with full 26 knowledge that Veoh’s users used Veoh to engage in massive copyright 27 infringement. Id. These investors controlled all critical decisions regarding the 28 content available on Veoh, including the removal of adult content, and “whether and 1874404.5 06 9 1 how Veoh might implement any technology and filter copyrighted content to 2 prevent infringement on Veoh’s site.” Id. ¶¶ 31-32. The Owner-Defendants failed 3 to use their control to remove infringing content from Veoh, and instead “decided to 4 continue Veoh’s infringing operations in order to continue to attract users and 5 advertising dollars to Veoh, and increase the value of their financial interests in 6 Veoh.” Id. ¶ 31. The Owner-Defendants are not – and never have been – passive 7 investors in Veoh. They sought and obtained control far in excess of the degree of 8 involvement and control that shareholders would typically obtain so that they could 9 direct the operations of Veoh, knowing full well that the site displayed and 10 distributed copyrighted works without appropriate licenses, and knowing full well 11 that Veoh’s users used Veoh to engage in massive copyright infringement. 12 As in Fonovisa and Bertelesmann, and under established Ninth Circuit 13 standards, UMG has alleged sufficient facts to state claims for contributory and 14 vicarious infringement. UMG has alleged that the Veoh Owner-Defendants had full 15 knowledge of Veoh’s infringement, and were directly involved with and materially 16 contributed to Veoh’s unlawful conduct. UMG has also alleged that the Veoh 17 Owner-Defendants had the right and ability to control Veoh’s infringement through 18 their positions on the Veoh Board of Directors, and financially benefited when 19 Veoh’s infringement drew more users, advertisers, and revenue. 20 Although here UMG merely needs to show that it can allege sufficient claims, 21 and need not provide any supporting evidence, UMG has supplied such evidence, 22 and it confirms that UMG’s allegations are both sufficient and true. Preliminary 23 discovery from the Veoh Owner-Defendants confirms that the Veoh Owner24 Defendants have the right and ability to control Veoh’s infringement, had 25 knowledge of that infringement, and materially contributed to that infringement.3 26 3 Unlike the other Veoh Owner-Defendants, Shelter Capital has not yet produced any discovery in response to UMG’s subpoena. However, Board minutes 28 produced by the other Veoh Owner-Defendants demonstrate Shelter Capital’s involvement in the operation and control of Veoh. 27 1874404.5 06 10 1 For example, minutes of Veoh Board meetings reveal that the Veoh Owner2 Defendants have an important role in virtually all key strategic and operational 3 decisions affecting Veoh. McReynolds Decl., Ex. 8 (March 21, 2006 Board 4 Minutes); Ex. 9 (June 19, 2006 Board Minutes4); Ex. 10 (September 25, 2007 Board 5 Minutes). See also McReynolds Decl., Ex. 11 (March 30, 2006 email); Ex. 12 6 (March 15, 2007 email). Other documents produced by some of the Veoh Owner7 Defendants further confirm their complicity in Veoh’s infringement of copyrighted 8 works. See id., Ex. 13 (June 27, 2006 Tornante email). These documents reveal 9 that the Veoh Owner-Defendants recognize the financial benefit they seek to derive 10 from Veoh’s infringement and their complicity in that infringement. UMG includes this evidence not as exhaustive proof of its claims (indeed, 11 12 there is a lot more evidence), but merely to show that, far from being futile, the 13 proposed amendment is meritorious. As discovery proceeds, UMG will 14 undoubtedly receive even more evidence confirming its allegations. In sum, this is 15 not a close case; amendment is overwhelmingly appropriate under Rule 15. 16 // 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 25 26 4 Because the documents evidencing these matters have been (wrongly, we believe) designated highly confidential under the Interim Protective Order, to avoid 28 the need to file this brief under seal, we have only provided cursory descriptions of the documents attached to the McReynolds Declaration here. 27 1874404.5 06 11 1 IV. CONCLUSION 2 For the foregoing reasons, UMG respectfully requests that the Court grant the 3 instant motion to amend. 4 5 Dated: June 16, 2008 Respectfully Submitted, IRELL & MANELLA LLP 6 7 8 By: 9 10 11 /s Steven A. Marenberg Elliot Brown Brian Ledahl Attorneys for Plaintiffs UMG RECORDINGS, INC.; UNIVERSAL MUSIC CORP.; SONGS OF UNIVERSAL, INC.; UNIVERSAL-POLYGRAM INTERNATIONAL PUBLISHING, INC.; RONDOR MUSIC INTERNATIONAL, INC.; UNIVERSAL MUSIC – MGB NA LLC; UNIVERSAL MUSIC – Z TUNES LLC; and UNIVERSAL MUSIC – MBG MUSIC PUBLISHING LTD. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1874404.5 06 12
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