Not So Happy Together: Punitive Damages Claim Blocked by First Impression Bar

October 4, 2016

In a case pitting the 1960s band The Turtles — best known for the 1967 hit “Happy Together” — against satellite radio, a federal court in California recently granted summary judgment for Sirius XM Radio on the plaintiffs’ claim for punitive damages based on the “first impression” bar. See Flo & Eddie Inc. v. Sirius XM Radio, Inc., 2:13-cv-05693 (C.D. Cal. Sept. 8, 2016). To date, the case has garnered significant press on copyright and exclusivity issues. Although the court’s punitive damages decision has not been the focal point of this ongoing press coverage, it is an important reminder that punitive damages are not appropriate when the right or duty at issue has not been previously recognized.

Flo & Eddie, two original band members of The Turtles, sued Sirius XM for playing pre-1972 recordings without seeking permission or paying royalties. Sirius XM, however, had been following decades of industry practice; radio stations regularly played such recordings without paying royalties. Two years ago, in September 2014, the court granted Flo & Eddie’s motion for summary judgment holding that, under California copyright law, Flo & Eddie held the exclusive right to publicly perform The Turtles’ pre-1972 recordings. Therefore, Sirius XM had been playing The Turtles recordings without authorization.

This ruling, however, paved the way for summary judgment on punitive damages. In ruling on Flo & Eddie’s punitive damages claim, the court recognized that prior to its September 2014 ruling, “no court had ever expressly recognized [] a right” to royalties for pre-1972 recordings. Defining a case of first impression as “one that presents the court with an issue of law that has not previously been decided by any controlling legal authority in that jurisdiction[,]” the court concluded that because no court had previously recognized the right, Flo & Eddie’s claim was a matter of first impression.

The court recognized — as many courts before had — that when a right or duty has not been previously determined, punitive damages based on violating that right or breaching that duty are barred. The court noted that “the rationale behind not allowing punitive damages in cases of first impression is that the requisite intent or willfulness required to consciously disregard another’s right cannot be present if no right or duty has been recognized.” This reasoning further comports with the Supreme Court’s jurisprudence starting with BMW of North America v. Gore that applies due process considerations to punitive damages. Indeed, a party should not be punished with the imposition of punitive damages when it could not have known that it violated a right or breached a duty because the right or duty had not been established.

The first impression bar can apply to various punitive damages claims, and is not limited to cases — like here — where the court declares a right exists. Indeed, the same argument applies when punitive damages are sought for conduct that the defendant previously thought was legal. The key question is whether the defendant had reason to know its conduct violated a duty or right. If not, the first impression bar may apply.