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IP/Entertainment Case Law Updates

Lenz v. Universal Music Corp., et al.

Court upholds magistrate’s order granting motion to compel production of communications between in-house counsel, client, and third party where defendant failed to establish that communications were made to third party in furtherance of common legal interest

Plaintiff Stephanie Lenz posted a thirty second video on YouTube entitled “Let’s Go Crazy #1.” The video featured her young toddler performing an impromptu dance to the song “Let’s Go Crazy” by the artist professionally known as Prince. Defendant Universal Music Corp. administers the copyright to the original composition. Upon receiving a takedown notice from Universal, YouTube removed the video and notified Lenz that it had done so. Lenz demanded that the video be restored and YouTube acquiesced. Lenz subsequently brought suit against Universal alleging a violation of 17 U.S.C. § 512(f), which creates a cause of action against any person who knowingly misrepresents that online “material or activity is infringing.”

On August 25, 2009, the magistrate judge presiding over the action granted, in part, Lenz’s motion to compel the production of communications between Universal, Prince, and third parties as well as policies, procedures, and documents relating to the takedown notice. Universal made a timely objection to the Order in district court, claiming that the communications between it and Prince relating to the enforcement of Prince’s copyrights are privileged. Reviewing the magistrate judge’s ruling under a “clearly erroneous” standard, the district court overruled Universal’s objection.

In support of its decision, the district court explained that “confidential communications made by a client to an attorney to obtain legal services” are generally protected from disclosure. To assert the attorney-client privilege, the court instructed, Universal bears the burden of establishing that (1) legal advice was sought, (2) from a professional legal adviser in his or her capacity as such, (3) with the communication relating to that purpose, (4) made in confidence, (5) by the client. Disclosure of an otherwise privileged communication to a third party, however, destroys confidentiality and therefore waives privilege.

Universal asserted that its communications with a third party, namely Prince, did not waive privilege under the common-interest doctrine. Although the district court acknowledged that the doctrine saves an otherwise privileged communication from waiver where the communication is shared in furtherance of a common legal interest, the court emphasized that such communications are not protected when made to advance a common business interest. Universal contended that its communications with Prince served the former purpose. Both the magistrate judge and district court disagreed, determining instead that Universal was contractually designated to act as an agent with respect to Prince’s “business interests.” Universal’s counsel, the district court noted, explicitly disavowed any claim that Universal and Prince had an attorney-client relationship.

The district court also emphasized the legally significant distinction between communications with, on one hand, outside counsel, and on the other, in-house counsel. As opposed to in-house counsel, who may operate in a purely or primarily business capacity, the court explained that communications with outside counsel are presumptively privileged. Along these lines, the magistrate judge found that Universal had not met its burden of proving that its in-house counsel dispatched the takedown notice as part of a legal strategy. Without more, the district court stated, the magistrate judge’s ruling was not clearly erroneous.

Finally, Universal also claimed that the subject communications were protected by the work product doctrine. However, under the Federal Rules of Civil Procedure, a privilege should be specifically asserted “within thirty days” of a request for production. In the instant case, the district court found that Universal failed to make a specific and timely assertion of work product protection.