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    CLASS ACTION COMPLAINT 1116420v1

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       M   C   K   O   O   L   S   M   I   T   H   H   E   N   N   I   G   A   N ,   P .   C .

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       L   O   S   A   N   G   E   L   E   S ,   C   A   9   0   0   1   7

    McKOOL SMITH HENNIGAN, P.C.RODERICK G. DORMAN (SBN 96908)[email protected] ROBERT E. ALLEN (SBN 166589)[email protected] LAWRENCE M. HADLEY (SBN 157728)[email protected] ALAN P. BLOCK (SBN 143783)[email protected] 865 S. Figueroa St., Suite 2900Los Angeles, CA 90017T: (213) 694-1200; F: (213) 694-1234 

    MILLER LAW LLCMARVIN A. MILLER ( pro hac vice application pending)[email protected] SZOT ( pro hac vice application pending)[email protected] KATHLEEN BOYCHUCK ( pro hac vice application pending)[email protected] 115 S. LaSalle Street, Suite 2910Chicago, IL 60603T: (312) 332-3400; F: (312) 676-2676

    Attorneys for PlaintiffABS ENTERTAINMENT, INC.

    UNITED STATES DISTRICT COURT

    FOR THE CENTRAL DISTRICT OF CALIFORNIA

    ABS ENTERTAINMENT, INC., anArkansas corporation, each individuallyand on behalf of all others similarlysituated.

    Plaintiff,

    v.

    iHEARTMEDIA, INC., a Delawarecorporation;iHEARTCOMMUNICATIONS, INC.,a Texas corporation; IHEARTMEDIA+ ENTERTAINMENT, INC., a Nevadacorporation; and DOES 1 through 10,

    Defendants.

    Case No. 2:15-cv-6252

    CLASS ACTION COMPLAINT

    1. 

    VIOLATION OF CALIFORNIACIVIL CODE § 980(a)(2);

    2.  MISAPPROPRIATION;3.  VIOLATION OF CALIFORNIA

    BUSINESS AND PROFESSIONSCODE § 17200; and

    4. 

    CONVERSION.

    DEMAND FOR JURY TRIAL

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 1 of 20 Page ID #:1

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    1 Plaintiff, ABS Entertainment, Inc. ( ABS ) ( Plaintiff'), individually and on

    2 behalf of all other similarly situated owners of sound recordings, hereby complains

    3 and alleges as follows:

    4 PRELIMIN RY ST TEMENT

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    1

    This is a class action on behalf of owners

    of

    sound recordings to obtain

    injunctive relief and monetary damages sustained by Plaintiff and the Class because

    the Defendants delivered music content through broadcast radio channels,

    HD

    radio

    channels, satellite radio, the Internet and mobile devices without consent of or

    licenses from the Plaintiff and the Class. As a result

    of

    their pernicious, improper and

    illegal conduct, Defendants have reaped hundreds ofmillions of dollars that rightfully

    belong to Plaintiff and the Class.

    2

    Defendant iHeartMedia, Inc. (through itself and its subsidiaries

    iHeartCommunications, Inc. and iHeartMedia +Entertainment, Inc.) (collectively,

    iHeart ) is one of the leading operators in the United States ofmedia and

    entertainment services via broadcast and digital delivery. Specifically, iHeart

    delivers music content through broadcast (AM and FM) radio channels, the Internet

    at iHeartRadio.com and its stations' websites, and through one or more iHeartRadio

    mobile applications on smart phones, tablets and gaming consoles. According to

    iHeart, as ofDecember 31,2014, it owned

    858

    domestic radio stations, servicing

    more than 150 U.S. markets, including 44 of the top 50 markets and 84 of the top 100

    markets. (Delivery by iHeart ofmusical content through AM and FM radio stations

    shall hereafter be described as the Broadcast Service ). Many

    of

    its stations in the

    Broadcast Service are the most popular music stations in the applicable market,

    including in Los Angeles, where iHeart owns and operates KIIS 102.7-FM, KBIG

    104.3-FM, KOST 103.5-FM, KYSR 98.7-FM and KRRL 92.3-FM.

    26

    3 iHeart utilizes the Internet to give users instant access to thousands of live

    27 radio stations from across the country. In addition, iHeart uses the Internet to provide

    28

    1

    CLASS ACTION COMPLAINT

    1116420vl

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    Because iHeart has chosen to operate the Music Service without licenses

    2 for Pre-1972 Recordings, iHeart

    is

    now liable under California law for violation of

    3 California Civil ode§ 980(a)(2), misappropriation, violation of California Business

    4 Professions ode§ 17200, and conversion for its unauthorized reproduction,

    5 distribution, and public performance

    of

    those recordings.

    6

    THE P RTIES

    7 8 ABS is a corporation duly organized and existing under the laws of

    8 Arkansas, with its principal place ofbusiness in West Memphis, Arkansas.

    9

    9

    Through a series

    of

    transactions, ABS acquired the exclusive ownership

    10 in the sound recordings

    of

    Al Green, Willie Mitchell, Ann Peebles, Syl Johnson, Otis

    11

    Clay, Bill Black Combo, and O.V Wright, a representative sample

    of

    the titles

    of

    12

    which are specified on the attached Schedule A and incorporated herein by

    13

    reference (the Recordings ).

    14 10 Plaintiffhas been and continues to be engaged in the business

    of

    15

    distributing, selling, and/or licensing the reproduction, distribution, sale, and

    16 performance

    of

    the Recordings including in records, audiovisual works, and for

    17 streaming (i.e., performing) and downloading over the Internet.

    18 11 iHeartMedia, Inc. is a corporation duly organized and existing under the

    19 laws of Delaware, with its principal place ofbusines'3 in San Antonio, Texas, and

    20 with its executive offices in New York, New York. iHeartMedia, Inc.

    is

    the parent

    21 company of iHeartCommunications, Inc. and iHeartMedia +Entertainment, Inc., and

    22 owns and operates the Music Service, which broadcasts music to its listeners and

    23 delivers uninterrupted, high quality streams ofmusic tailored and customized to its

    24 users' preferences.

    25 12. iHeartCommunications, Inc. is a corporation duly organized and existing

    26 under the laws ofTexas, with its principal place

    of

    business in San Antonio, Texas,

    27 and with its executive offices in New York, New York. iHeartCommunications, Inc.

    28

    3

    CLASS ACTION COMPLAINT

    1116420vl

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 4 of 20 Page ID #:4

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    Service, iHeart offers and advertises both (a) custom radio programming, which

    allows a user to select one or more favorite artists and then iHeart s internal algorithm

    selects other sound recordings that the user might enjoy, and (b) live radio simulcast,

    which allows a user to select and listen to the live audio simulcast of hundreds of

    radio stations throughout the United States and Mexico, inclusive of radio stations

    either owned by iHeart or owned by third parties.

    Many of

    these radio stations are

    dedicated to Pre-1972 Recordings. iHeart promotes these stations in order to

    establish and increase its user base, popularity, and revenue.

    23. Plaintiff is informed and believes, and on that basis alleges, that in order

    to populate the Music Service s databases and in order to broadcast and stream

    musical recordings to the public, iHeart has reproduced and copied and continues to

    reproduce and copy Pre-1972 Recordings to one or more servers and storage devices,

    and uses technology or systems that results in one

    or

    more copies ofPre-1972

    Recordings being distributed to its users computers or storage devices.

    24. iHeart knows that it does not have any license, right, or authority to

    reproduce, perform, distribute or otherwise exploit

    vi

    the Music Service any Pre-

    1972 Recordings (including the Recordings). iHeart also knows which of the

    recordings its reproduces, performs, distributes or otherwise exploits vi the Music .

    19 Service are Pre-1972 Recordings.

    20 25. iHeart s entire business is built around selling access to music and selling

    2 the music. iHeart delivers audio advertisements to its users in between songs and

    22 displays visual ads while music is playing.

    23 CL SS CTION LLEG TIONS

    24 26. Plaintiff brings this action, pursuant to Fed. R. Civ. P. 23, on behalf

    of

    25 itself individually and on behalfof all other similarly situated owners

    of

    Pre-1972

    26 recordings, which recordings were reproduced, performed, distributed or otherwise

    27 exploited by iHeart via the Music Service in California. The proposed Class is

    28

    7

    CLASS ACTION COMPLAINT

    1116420vl

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 8 of 20 Page ID #:8

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    1 comprised of and defined as follows:

    2 All owners of sound recordings of musical performances that

    3 initially were fixed

    i.e.,

    recorded) prior to February 15, 1972,

    4 which sound recordings were reproduced, performed, distributed

    5 and/or otherwise exploited by iHeart via any form or method

    of

    6 delivery or storage (e.g., terrestrial broadcast, satellite, Internet,

    7 computer, server, etc.) in California (the Class ).

    8 27. This action may be properly brought and maintained as a class action

    9 because there is a well-defined community of interest in the litigation and the

    1 members of the proposed Class are clearly and easily ascertainable and identifiable.

    11 28. The Class for whose benefit this action is brought is so numerous and

    12 geographically dispersed that joinder of all members of the Class is impracticable.

    13 Plaintiff is informed and believes that there are hundreds or thousands of members of

    14 the Class whose identity can be readily ascertained from third party, music industry

    15 sources and from iHeart 's database files and records. Therefore, the Class can be

    16 readily located and notified

    of

    this action.

    17 29. Plaintiff's claims are typical

    of

    the claims

    of

    the members of the Class,

    18 and Plaintiff's interests are consistent with and not antagonistic to those of the Class

    19

    it seeks to represent. Plaintiff and all members of the Class have sustained actual

    20 pecuniary loss and face irreparable harm arising out ofiHeart s continued course

    of

    21 conduct as complained ofherein.

    22 30. Plaintiff does not have any interests that are adverse to, or which conflict

    23 with, the interests of the absent members

    of

    the Class and it is able to fairly and

    24 adequately represent and protect the interests of such Class. Plaintiff has raised

    25 viable statutory, misappropriation, unfair business practices, and conversion claims of

    26 the type reasonably expected to be raised by members

    of

    the Class, and will

    27 vigorously pursue those claims. Plaintiff is represented by experienced, qualified and

    28

    8

    CLASS ACTION COMPLAINT

    111642 vl

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 9 of 20 Page ID #:9

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    (H) Whether iHear t s conduct is continuing thereby entitling the

    members of the Class to injunctive or other relief.

    32. A class action is superior to other available methods for the fair and

    efficient adjudication

    of

    this controversy since individual litigation

    of

    the claims

    of

    all class members is impracticable. Thus, for the vast majority

    of

    the members of the

    Class, the expense and burden of individual litigation would not justify pursuing the

    claims individually. Even if every member of the Class could afford to pursue

    individual litigation, the Court system could not. It

    would

    be unduly burdensome to

    the courts

    in

    which individual similar litigation of numerous cases would proceed.

    Individualized litigation would also present the potential for varying, inconsistent, or

    contradictory judgments and would magnify the delay

    and

    expense to all parties and

    to the court system resulting from multiple trials of the same factual issues. By

    contrast, the maintenance of this action

    as

    a class action presents few,

    if

    any,

    management difficulties, conserves the resources of

    the parties and

    of

    the court

    system,

    and

    protects the rights

    of

    each member of the Class. Plaintiff does not

    anticipate any difficulty in the management

    of

    this action as a class action.

    FIRST CLAIM FOR RELIEF

    For Violation

    of

    California Civil

    ode§

    980 a) 2) Against All Named

    Defendants and Does 1 through 10)

    33. Plaintiff hereby incorporates the allegations set forth above in paragraphs

    1 through 32 above, as though fully set forth herein.

    34. Pursuant to California Civil Code§ 980(a)(2), Plainti ff and the members

    of the Class possess exclusive ownership interests in and to the Pre-1972 Recordings,

    including the artistic performances embodied in those recordings.

    35. Through its unauthorized reproduction, performance, distribution, or other

    exploitation via the Music Service of Pre-1972 Recordings (including the

    1

    CLASS ACTION COMPLAINT

    111642 vl

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 11 of 20 Page ID #:11

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    Recordings) in California, iHeart has infringed the exclusive ownership interests in

    and to the Pre-1972 Recordings in violation of California Civil

    Code§

    980(a)(2).

    36. As a direct and proximate consequence

    ofiHeart's

    violation

    of

    California

    Civil

    Code§

    980(a)(2), iHeart has received and retained money and value that

    rightfully belongs to Plaintiff and the members of the Class.

    37. As a direct and proximate consequence

    ofiHeart's

    violation

    of

    California

    Civil

    Code§

    980(a)(2), Plaintiff and the Class have been damaged in an amount that

    is not

    as

    yet fully ascertained but which Plaintiff will ascertain and present through

    competent evidence at trial, but which is no less than 5 million.

    38. iHeart s conduct is causing, and unless enjoined and restrained by this

    Court will continue to cause Plaintiff and the Class great and irreparable injury that

    cannot fully be compensated or measured in money. Plaintiff and each member of

    the Class do not have an adequate remedy at law. Plaintiff and each member of the

    Class are entitled to temporary, preliminary and permanent injunctions, prohibiting

    further violation of the ownership interests

    of

    Plaintiff and each member

    of

    the Class

    in the Pre-1972 Recordings.

    SECOND CLAIM

    FOR R LI F

    For Misappropriation Against All Named Defendants and Does 1 Through 10)

    39. Plaintiff hereby incorporates the allegations set forth above in paragraphs

    1 through 32 above, as though fully set forth herein.

    40. Pursuant to California Civil Code§ 980(a)(2) and California common

    law, Plaintiff and the Class possess exclusive ownership interests in and to the Pre-

    1972 Recordings, including the artistic performances embodied in those recordings.

    24

    41. Plaintiff and its predecessors in interest invested substantial time and

    25

    money in developing the Recordings.

    26 42. Because iHeart does not obtain licenses, it does not incur any of the costs

    27 that a licensee is otherwise obligated to pay in order to reproduce, perform, distribute

    28

    11

    CLASS ACTION COMPLAINT

    1116420vl

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    1 or otherwise exploit via the Music Service Pre-1972 Recordings (including the

    2 Recordings).

    3 43. iHeart has misappropriated, and continues to misappropriate, for its own

    4 commercial benefit, the exclusive ownership interests in and to the Pre-1972

    5 Recordings reproducing, performing, distributing or otherwise exploiting via the

    6 Music Service Pre-1972 Recordings (including the Recordings).

    7 44. As a direct and proximate consequence ofiHeart s

    misappropriation,

    8 iHeart has received and retained money and value that rightfully belongs to Plaintiff

    9 and the Class.

    1 45. As a direct and proximate consequence

    ofiHeart s

    misappropriation,

    11 Plaintiff and the Class have been damaged in an amount that is not as yet fully

    12 ascertained but which Plaintiff will ascertain and present through competent evidence

    13 at trial.

    14 46. Plaintiff is informed and believes, and on that basis alleges, that in

    15 engaging in the conduct described herein, iHeart acted with oppression, fraud and/or

    16

    malice. iHeart s conduct has been despicable and undertaken in conscious disregard

    17

    of

    the rights

    of

    Plaintiff and the Class. Accordingly, Plaintiff and the Class are

    18 entitled to an award

    of

    punitive damages against iHeart in an amount sufficient to

    19

    punish and make an example

    of

    it.

    20 47. iHeart s conduct is causing, and unless enjoined and restrained by this

    21 Court, will continue to cause, Plaintiff and the Class great and irreparable injury that

    22 cannot fully be compensated or measured in money. Plaintiff and the Class do not

    23

    have an adequate remedy at law. Plaintiff and the Class are entitled to temporary,

    24 preliminary and permanent injunctions, prohibiting further violation

    of

    the ownership

    25

    interests

    of

    Plaintiff and the Class in the Pre-1972 Recordings.

    26

    27

    28

    12

    CLASS ACTION COMPLAINT

    111642 vl

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    1

    THIRD CLAIM FOR RELEIF

    2

    For Unfair Business Practices Against All Named Defendants and Does 1

    3 Through 10)

    4 48. Plaintiff hereby incorporates the allegations set forth above in paragraphs

    5 1 through 32 above, as though fully set forth herein.

    6 49. Pursuant to California Civil

    Code§

    980(a)(2) and California common

    7 law, Plaintiff and the Class possess exclusive ownership interests in and to the Pre-

    8 1972 Recordings, including the artistic performances embodied in those recordings.

    9 50. iHeart s conduct in reproducing, performing, distributing, or other

    10 exploitation via the Music Service Pre-1972 Recordings (including the Recordings)

    11 constitutes a misappropriation

    of

    the property rights of the Plaintiff and the Class in

    12 the Pre-1972 Recordings and a violation of California Civil

    Code§

    980(a)(2).

    13

    51. By misappropriating the property rights

    of

    the Plaintiff and each member

    14 of the Class in the Pre-1972 Recordings and by violating California Civil Code §

    15 980(a)(2), iHeart has engaged in unfair business practices in violation of California

    16 Business Professions Code § 17200.

    17 52. As a direct and proximate consequence of its violation of California

    18 Business Professions Code § 17200, iHeart has received and retained money and

    19 value that rightfully belongs to Plaintiff and the Class.

    20 53. As a direct and proximate result

    ofiHeart s

    conduct, Plaintiff and each

    21

    member of the Class are entitled to restitution and disgorgement under California

    22 Business Professions Code § 17200 in an amount that is not as yet fully ascertained

    23 but which Plaintiff will ascertain and present through competent evidence at trial.

    24 54. Plaintiff is informed and believes, and

    on

    that basis alleges, that in

    25 engaging in the conduct described herein, iHeart acted with oppression, fraud and/or

    26 malice. The conduct of iHeart has been despicable and undertaken in conscious

    2 7 disregard of the rights of Plaintiff and the Class. Accordingly, Plaintiff and the Class

    28

    3

    CLASS ACTION COMPLAINT

    111642 vl

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    1 malice. iHeart s conduct has been despicable and undertaken in conscious disregard

    2 of the rights of Plaintiff and each member

    of

    the Class. Accordingly, Plaintiff and the

    3 Class are entitled to an award

    of

    punitive damages against iHeart in an amount

    4 sufficient to punish and make an example

    of

    it.

    5 62. iHeart s conduct is causing, and unless enjoined and restrained by this

    6 Court, will continue to cause Plaintiff and the Class great and irreparable injury that

    7 cannot fully be compensated or measured in money. Plaintiff and the Class do not

    8 have an adequate remedy at law. Plaintiff and the Class are entitled to temporary,

    9 preliminary and permanent injunctions, prohibiting further violation

    of

    the ownership

    10 interests

    of

    Plaintiff and the Class in the Pre-1972 Recordings.

    11

    PR YER

    12 WHEREFORE, Plaintiff, on behalf of themselves and all other members of the

    13 Class, pray for Judgment against iHeart and the Doe defendants, and each

    of

    them, as

    14 follows:

    15

    A.

    Determining that this is a proper class action maintainable pursuant to

    16 Rule

    23

    of

    the Federal Rules Civil Procedure, and certifying Plaintiff as a Class

    17 Representative, and appointing

    Plaintiffs

    counsel as Class Counsel.

    18

    B. On all claims other than the Third, compensatory damages in excess

    of

    5

    19 million according to proof.

    20 C. On the third claim, restitution and disgorgement

    ofiHeart's

    unlawful

    21 proceeds and revenues, including iHeart s gross profits, in excess

    of 5

    million.

    22 D. On all claims other than the first, punitive and exemplary damages

    23 according to

    proof

    at trial.

    24 E. On all claims, a temporary, preliminary, and permanent injunction

    25 enjoining and restraining iHeart, and their respective agents, servants, directors,

    26 officers, principals, employees, representatives, subsidiaries and affiliated companies,

    27 successors, assigns, and those acting in concert with them or at their direction, from

    28

    15

    CLASS ACTION COMPLAINT

    1116420vl

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    1 infringing, misappropriating, or converting, directly or indirectly, in California the

    2 exclusive ownership interests in and to the Pre-1972 Recordings, including the artistic

    3 performances embodied in those recordings, including without limitation by directly

    4 or indirectly copying, reproducing, downloading, distributing, communicating to the

    5 public, uploading, linking to, transmitting, publicly performing, or otherwise

    6 exploiting in any manner any o the Pre-1972 Recordings, via the Music Service or

    7 otherwise.

    8 F On all claims, pre- and post-judgment interest.

    9 G For such fees and costs (including reasonable attorneys' fees) incurred

    10

    herein as permitted by law.

    11

    H

    For such other and further relief as the Court deems just and proper.

    12

    3

    DATED: August 17,2015

    14

    15

    16

    17

    18

    19

    20

    21

    22

    23

    24

    25

    26

    27

    28

    1 16420vl

    McKOOL SMITH HENNIGAN, P.C.

    MILLER LAW LLC

    By:

    Is

    Robert

    E

    llen

    6

    Robert

    E

    Allen

    Attorneys for Plaintiff

    ABS ENTERTAINMENT, INC.

    CLASS ACTION COMPLAINT

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 17 of 20 Page ID #:17

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     0

    o o

    . 0 >

    Q . . N

    Ll.l

    ZI - t - -

    < 5 ~

    9UJ:5

    ~ ~

    ztl:Ju

    We::

    .

    J : i ~

    :r;UJ...J

    f-

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    1116424vl

    Artist

    Ace Cannon

    Ace Cannon

    Ace Cannon

    Ace Cannon

    I Green

    I Green

    I

    Green

    I Green

    I

    Green

    I Green

    I Green

    I Green

    Ann Peebles

    Ann Peebles

    Ann Peebles

    Ann Peebles

    Ann Peebles

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Bill Black Combo

    Otis Clay

    Otis Clay

    Otis Clay

    Schedule A

    Representative Sampling

    o

    Plaintiff s Pre-1972

    Sound Recordings Infringed

    Title

    Tuff

    Bllues (Stay Away From Me)

    Cotton Fields

    Search in

    Want to Hold Your Hand

    One Woman

    You

    Say

    It

    Right Now, Right Now

    I Can t Get Next To You

    Driving Wheel

    Tired of Being Alone

    Let s Stay Together

    WalkAway

    Give Me Some Credit

    Generation Gap Between

    Us

    Part Time Love

    I Pity The Fool

    Smokie, Part 2

    White Silver Sands

    Josephine

    Don t

    Be

    Cruel

    Blue Tango

    Hearts of Stone

    Ole

    Buttermilk

    Sky

    Movin

    Twist Her

    Do It -

    Rat

    Now

    Money Shine

    That s How It Is (When You re

    In

    Love

    A Lasting Love

    She s About A Mover

    1

    SCHEDULE A

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 19 of 20 Page ID #:19

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    O.V. Wright

    O.V. Wright

    O.V. Wright

    O.V. Wright

    O V

    Wright

    O.V. Wright

    O.V.

    Wright

    O.V. Wright

    Syl Johnson

    Syl

    Johnson

    Syl Johnson

    Syl Johnson

    Syl

    Johnson

    Syl

    Johnson

    Syl

    Johnson

    Wilie Mitchell

    Wilie Mitchell

    Wilie

    Mitchell

    Wilie

    Mitchell

    Wilie

    Mitchell

    Wilie Mitchell

    Wilie Mitchell

    Wilie

    Mitchell

    Wilie

    Mitchell

    You re Gonna Make Me Cry

    Eight

    Men,

    Four

    Women

    Heartaches, Heartaches

    Oh

    Baby

    Mine

    I ll Take Care

    of

    You

    Ace

    of

    Spades

    When You Took Your Love From

    Me

    A Nickel and a Nail

    Come On Sock It To Me

    Different

    Strokes

    Dresses Too Short

    Is It Because I m Black

    Concrete Reservation

    One Way Ticket to Nowhere

    Get Ready

    20 75

    Percolatin

    Buster Browne

    Bad Eye

    Slippin and Slidin

    Soul Serenade

    Prayer

    Meetin

    30 60 90

    My Babe

    -2-

    SCHEDULE A

    Case 2:15-cv-06252 Document 1 Filed 08/17/15 Page 20 of 20 Page ID #:20