First Department Affirms Dismissal of Howard Stern’s Suit Against Kramer Levin Client Sirius XM

By a unanimous decision issued on April 11, 2013, the Appellate Division—First Department affirmed the order of the Commercial Division of the New York State Supreme Court dismissing the breach of contract action brought by One Twelve, Inc. (Howard Stern’s production company) and Don Buchwald (Howard Stern’s agent) against Kramer Levin client Sirius XM Radio Inc. One Twelve and Buchwald alleged that Sirius XM had breached the initial agreement that licensed Sirius XM to broadcast Stern's radio program when it did not pay certain performance based compensation amounting to $300 million for One Twelve and $30 million for Buchwald. The agreement provided for payment of up to five blocks of stock worth $75 million each for One Twelve and $7.5 million for Buchwald if the number of “Sirius subscribers” exceeded certain projections included in the agreement. At issue in the case was whether the number of XM subscribers should be counted as "Sirius subscribers" following the July 2008 merger between a subsidiary of Sirius XM and XM Satellite Radio Inc. The Commercial Division accepted the argument of Sirius XM that XM subscribers should not be counted as “Sirius subscribers,” holding that “the clear, unambiguous language” showed that the parties intended "Sirius subscribers" to refer only to those person who subscribed to the Sirius satellite radio service (and not those who subscribed to the separate XM satellite radio service). By dismissing the complaint with prejudice, the court made clear that Sirius XM had fully performed its obligations to One Twelve and Stern. In affirming this dismissal, the Appellate Division wrote: “We agree with the motion court that plaintiffs are not entitled to additional performance-based compensation under the unambiguous agreement between plaintiffs and defendant’s predecessor, Sirius Satellite Radio Inc.” The Kramer Levin team consisted of firm co-chair and Litigation Department head Gary P. Naftalis, Litigation partner Michael S. Oberman, chair of the IP Department Peter A. Abruzzese and Litigation associate Jared I. Heller, with valuable input from Litigation partner Ronald S. Greenberg and Individual Client Department counsel Eve Preminger.