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United States District Court,S.D. New York.CAPITOL RECORDS, LLC, d/b/a EMI Music North America, Plaintiff,v.ESCAPE MEDIA GROUP, INC., Defendant.

No. 12CV6646 (AJN).Signed March 25, 2015.

MEMORANDUM AND ORDERALISON J. NATHAN, District Judge.*1 Before the Court is the report and recommendation (Report or R & R) of Magistrate Judge Sarah Netburn dated May 28, 2014, Dkt. No. 90, regarding Plaintiff EMI Music North America (EMI)'s motion for summary judgment. EMI moved for summary judgment as to its First and Sixth Claims for federal and common law copyright infringement. By stipulation, Defendant Escape Media Group, Inc. (Escape) conceded liability as to EMI's Second Claim for breach of the parties' September 24, 2009 Digital Distribution Agreement (Distribution Agreement). Dkt. No. 24. EMI did not move for summary judgment as to its Third Claim for breach of the parties' September 24, 2009 Settlement Agreement and Mutual Release (Settlement Agreement), Fourth Claim for unjust enrichment, or Fifth Claim for unfair competition, so those claims were not before Judge Netburn and are not before the Court now. Judge Netburn recommended denying Escape's challenge to the declaration of Ellis Horowitz and granting EMI's challenge to the declaration of Cole Kowalski. She also recommended denying EMI's motion for summary judgment as to its claim for direct infringement of its right of reproduction, but granting the motion as to its remaining copyright infringement claims and as to Escape's affirmative defenses under the Digital Millennium Copyright Act (DMCA) and under the parties' Distribution and Settlement Agreements. Escape objects to Judge Netburn's recommendations regarding (1) challenges to the Horowitz and Kowalski Declarations, (2) its entitlement to a DMCA safe harbor, and (3) the release of claims under the parties' prior agreements. For the reasons discussed below, the Court adopts Judge Netburn's recommendations in full.

I. BACKGROUNDBecause Escape objects only to Judge Netburn's application of the law to the facts of this case, the Court adopts in full her recitation of the relevant facts. See R & R 2741.FN1 The Court assumes familiarity with this material.

FN1. Where the Court cites additional factual materials, it draws from the Reply Statement of Undisputed Facts (RSUF), Dkt. No. 85. If supported, and if Escape did not controvert the fact by pointing to admissible evidence, the Court consider[s] the fact undisputed for purposes of the motion. Fed.R.Civ.P. 56(e)(2); Local Rule 56.1(d); see also YingJing Gan v. City of New York, 996 F.2d 522, 532 (2d Cir.1993).

II. STANDARD OF REVIEWDistrict courts may designate magistrate judges to hear and determine certain dispositive motions and to submit proposed findings of fact and a recommendation as to those motions. 28 U.S.C. 636(b)(1). Any party wishing to object to a magistrate judge's report and recommendation must do so within fourteen days after being served with a copy of the report and recommendation. Id. If a party submits a timely objection to a report and recommendation, the district court reviews de novo those portions to which the party objected. Id.; see also Norman v. Astrue, 912 F.Supp.2d 33, 39 (S.D.N.Y.2012). Otherwise, if no specific written objection is made, the district court may adopt those portions as long as the factual and legal basis supporting the findings and conclusions set forth ... are not clearly erroneous or contrary to law. Norman, 912 F.Supp.2d at 39 (quoting Eisenberg v. New England Motor Freight, Inc., 564 F.Supp.2d 224, 22627 (S.D.N.Y.2008)). A decision is clearly erroneous' when the reviewing Court is left with the definite and firm conviction that a mistake has been committed. Courtney v. Colvin, No. 13 Civ. 02884(AJN), 2014 U.S. Dist. LEXIS 4559, at *34 (S.D.N.Y. Jan. 14, 2014) (quoting Luster v. Mancini, No. 07 Civ. 8265(DAB), 2013 U.S. Dist. LEXIS 138599, at *67 (S.D.N.Y. Sept. 25, 2013)).

*2 Summary judgment is granted if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 32223 (1986). A genuine dispute as to any material fact exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). On a motion for summary judgment, a court views all evidence in the light most favorable to the non-movant, Overton v. NY. State Div. of Military & Naval Affairs, 373 F.3d 83, 89 (2d Cir.2004), and resolve[s] all ambiguities and draw[s] all permissible factual inferences in favor of the party against whom summary judgment is sought, Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2d Cir.2004).

The movant always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. But [e]ven where facts are disputed, in order to defeat summary judgment, the nonmoving party must offer enough evidence to enable a reasonable jury to return a verdict in its favor. Byrnie v. Town of Cromwell Bd. of Educ., 243 F.3d 93, 101 (2d Cir.2001). And if a plaintiff uses a summary judgment motion, in part, to challenge the legal sufficiency of an affirmative defenseon which the defendant bears the burden of proof at triala plaintiff may satisfy its Rule 56 burden by showing that there is an absence of evidence to support [an essential element] of [the non-moving party's case]. Nw. Mut. Life Ins. Co. v. Fogel, 78 F.Supp.2d 70, 7374 (E.D.N.Y. 19990 (quoting FDIC v. Giammettei, 34 F.3d 51, 54 (2d Cir.1994)).

III. DISCUSSIONAs noted, Escape objects to Judge Netburn's recommendations regarding (1) challenges to the Horowitz and Kowalski Declarations, (2) its entitlement to a DMCA safe harbor, and (3) the release of claims under the parties' prior agreements. EMI does not object to Judge Netburn's Report, including her recommendation that the Court deny its motion with respect to direct infringement of its right of reproduction. The court will turn to issues relating to the declarations first and will then analyze the merits of the dispositive motion.

A. Objections to the Horowitz and Kowalski DeclarationsBefore delving into the merits of EMI's summary judgment motion, Judge Netburn addressed challenges concerning two declarations submitted by the parties. Judge Netburn recommended (1) denying Escape's challenge to the Horowitz Declaration and (2) granting EMI's challenge to the Kowalski Declaration. R & R 7.

*3 Escape objects to both recommendations and contends that they should be reviewed de novo as if it had made an objection to a dispositive matter. The Court disagrees. Both Escape and EMI argued to Judge Netburn that the challenged declarations violated Rule 26, the Federal Rule of Civil Procedure governing discovery, and Judge Netburn properly noted that both parties' attempts to preclude the Court from relying on the declarations were based primarily on Rule 37, which provides certain sanctions for failures to make disclosures or to cooperate in discovery. Magistrate judges may, and often do, rule on nondispositive pretrial matters, including discovery disputes. Fed.R.Civ.P. 72(a). Contrary to Escape's suggestion, such nondispositive pretrial matters are reviewed for clear error. Id.; see also 636(b)(1)(A).

Moreover, the fact that Judge Netburn efficiently resolved the Rule 37 sanctions in the same Report in which she provided recommendations as to the motion for summary judgment does not change the standard of review applied to the Rule 37 sanctions. See Cardell Fin. Corp. v. Suchodolski Assocs., 896 F.Supp.2d 320, 324 (S.D.N.Y.2012) (A district court evaluating a magistrate judge's report may adopt those portions of the report addressing non-dispositive matters as long as the factual and legal bases supporting the findings and conclusions set forth in those sections are not clearly erroneous or contrary to law. (citing Fed.R.Civ.P. 72(a)); see also Arista Records, LLC v. Doe, 604 F.3d 110, 116 (2d Cir.2010) (Matters concerning discovery generally are considered nondispositive of the litigation. (quoting Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir.1990)); RMED Int'l, Inc. v. Sloan's Supermarkets, Inc., No. 94 Civ. 5587(PKL)(RLE), 2000 U.S. Dist. LEXIS 4892, at *4 n. 1 (S.D.N.Y.2000) (A decision to admit or exclude expert testimony is considered nondispositive of the litigation. (collecting cases)). Therefore, the Court reviews Judge Netburn's recommendations concerning the Horowitz and Kowalski Declarations for clear error. Finding none, the Court adopts her recommendations to deny Escape's challenge to the Horowitz Declaration and to strike the Kowalski Declaration under Rule 37(c)(1).

B. Copyright InfringementWith one minor exception, Escape does not make any specific objections to Judge Netburn's conclusions of direct and secondary liability for copyright infringement. Rather, Escape primarily contends that there was no evidence from which copyright infringement could be found because it argued that the Horowitz Declaration should be excluded from the universe of facts at issue on this motion. As noted, the Court finds no clear error with Judge Netburn's discovery-related conclusions. Therefore, there is evidence from which copyright infringement can be found because Horowitz's analysis of Grooveshark's system revealed, inter alia, 2,807 EMI-copyrighted sound recordings were copied on Escape's servers in at least 13,855 separate files, and EMI-copyrighted works were streamed 12,224,567 times since March 23, 2012.

*4 The only specific objection regarding copyright infringement that Escape raises is a footnote in its objection brief arguing that Judge Netburn overlooked an important distinction between federal and New York law concerning public performance rights in sound recordings. Obj.FN2 18 n. 11. But Escape did not raise this point in its opposition to summary judgment, and it is well established that a party may not raise an argument in an objection to a report and recommendation of a magistrate judge that was not fairly presented to the magistrate judge in the first instance. See, e.g., U.S. Bank N.A. v. 2150 Joshua's Path, LLC, No. 13CV1598 (SJF), 2014 U.S. Dist. LEXIS 127596, at *4 (E.D.N.Y. Sept. 10, 2014) ( A district court will generally not consider arguments that were not raised before the magistrate judge. (quoting Diaz v. Portfolio Recovery Assocs., LLC, No. 10 Civ. 3920, 2012 U.S. Dist. LEXIS 72724, at *5 (E.D.N.Y. May 24, 2012)). Therefore, because Escape did not raise this argument before Judge Netburn, the Court reviews Judge Netburn's conclusion on this point for clear error.

FN2. Obj. stands for Escape's objection to Judge Netburn's Report (Dkt. No. 94).

Escape argues that it was error for Judge Netburn to hold that the elements for copyright infringement under New York and federal law mirror each other and, therefore, may be analyzed together. Contrary to Escape's suggestion that Judge Netburn cited no authority for her conclusion on this point, she relied on Judge Sullivan's opinion in Capitol Records, LLC v. ReDigi Inc., 934 F.Supp.2d 640 (S.D.N.Y.2013), which stated that the elements for a direct infringement claim under federal law mirror those for infringement of common law copyright under [New York] state law. R & R 51. Judge Sullivan, in turn, relied on Capitol Records, Inc. v. Naxos of America, Inc., 830 N.E.2d 250, 265 (2005) (Naxos ), which held that New York provides common-law copyright protection to sound recordings not covered by the federal Copyright Act, regardless of the public domain status in the country of origin, if the alleged act of infringement occurred in New York. ReDigi, Inc., 934 F.Supp.2d at 658 n. 8. Like Judge Sullivan, other judges in this Court have similarly relied on Naxos to conclude that New York would recognize a right of public performance in sound recordings that would mirror the federal copyright in such sound recordings. See, e.g., Flo & Eddie, Inc. v. Sirius XM Radio, Inc., No. 13 Civ. 5784(CM), 2014 U.S. Dist. LEXIS 166492, at *25 (S.D.N.Y. Nov. 14, 2014) (interpreting Naxos and other New York authority to predict that the New York Court of Appeals would recognize the exclusive right to public performance of a sound recording as one of the rights appurtenant to common law copyright in such a recording). The Court agrees with this authority and, therefore, it finds no clear error with Judge Netburn's conclusion that the elements for EMI's federal claims for copyright infringement mirror its state law claims for copyright infringement.

*5 Because Escape does not make any specific objections to the remainder of Judge Netburn's recommendations regarding copyright infringement, the Court also reviews those conclusions for clear error. See, e.g., Watson v. Geithner, No. 11 Civ. 9527(AJN), 2013 U.S. Dist. LEXIS 141009, at *56 (S.D.N.Y. Sept. 27, 2013). Judge Netburn concluded that EMI had established that it owns or has the exclusive right in the United States to enforce copyrights in 2,807 sound recordings. She further held that Escape directly infringes EMI's right of public performance, but that it does not directly infringe EMI's right of reproduction. Judge Netburn then concluded that Grooveshark users directly infringe EMI's rights of reproduction and distribution, and that Escape is secondarily liable for this infringement under theories of vicarious and contributory liability. The Court finds no clear error with these conclusions. Finally, because Judge Netburn observed that common law copyright infringement claims generally mirror those of federal claims, she found that EMI was entitled to summary judgment on its direct infringement claimsexcept with respect to its right of reproductionand its secondary infringement claims for its pre1972 recordings under New York common law. The Court finds no clear error with these conclusions.

Because the Court finds no clear error with Judge Netburn's copyright infringement recommendations, the Court adopts them in full. But before concluding that EMI is entitled to summary judgment, the Court must examine Escape's objections regarding its two affirmative defenses under the DMCA and under the parties' prior agreements.

C. DMCA Safe HarborEscape objects to Judge Netburn's recommendations about its non-entitlement to the DMCA safe harbor, so the Court reviews this issue de novo. The Court notes at the outset that it agrees with Judge Netburn's careful analysis of this issue, see R & R 5279, and limits its discussion here to Escape's specific objections regarding Judge Netburn's conclusions.

As Judge Netburn noted, the DMCA added four safe harbor provisions to the Copyright Act in the form of 17 U.S.C. 512(a)-(d), which shield service providers from liability for copyright infringement under certain circumstances. But to qualify for any of the DMCA safe harbors, the service provider must first satisfy the conditions for eligibility described in 17 U.S.C. 512(i), which, among other things, require a service provider to have adopted and reasonably implemented, and informs subscribers and account holders of the service provider's system or networks of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers. 512(i)(1)(A). Like many courts, Judge Netburn isolated each component of 512(i)(1)(A)'s repeat infringer policy requirement and then analyzed Escape's purported policy to see if it satisfied the statute. See, e.g., Ellison v. Robertson, 357 F.3d 1072, 1080 (9th Cir.2004) (noting a service provider must (1) adopt a policy that provides for the termination of service access for repeat copyright infringers in appropriate circumstances; (2) implement that policy in a reasonable manner; and (3) inform its subscribers of the policy.); Wolk v. Kodak Imaging Network, Inc., 840 F.Supp.2d 724, 744 (S.D.N.Y.2012) (To fulfill the requirements of 17 U.S.C. 512(i), a service provider must (i) adopt a policy that provides for the termination of service access for repeat copyright infringers; (ii) inform users of the service policy; and (iii) implement the policy in a reasonable manner. (citing Corbis Corp. v. Amazon.com, Inc., 351 F.Supp.2d 1090, 1100 (W.D.Wash.2004))).

*6 Judge Netburn first noted that the repeat infringer policy that Escape informs its users of is not the same policy it purports to implement, but she generously concluded that Escape has adopted a repeat infringer policy based on its so-called one strike policy . She further concluded, and Escape agrees, Obj. 19, that the relevant repeat infringer policy for 512(i) purposes is this so-called one strike policy, not the policy set forth in Escape's Terms of Service. Under its one strike policy, Escape purports to disable[ ] account holders' upload privileges in response to DMCA notifications, but does not delete all data or audio files associated with their account or bar them from signing in to simply and passively use the Grooveshark website. Obj. 19 (citing Hostert Decl. 2429). Judge Netburn concluded that this policy of only barring uploading privileges while retaining accounts does not satisfy the repeat infringer policy requirement because it does not actually implement a repeat infringer policy within the meaning of 512(i), and, even assuming it did, Escape does not reasonably implement the policy, i.e., Escape does not terminate user's uploading privileges in appropriate circumstances. Cf. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 111015 (9th Cir.2007) (CCBill ) (analyzing separately implementation and reasonable implementation under 512(i)). Escape objects to both conclusions, which the Court addresses in turn.

1. Actual ImplementationAs Judge Netburn noted, Congress provided little guidance on the meaning of 512(i)'s various requirements. But over time, courts have looked at certain recurring features to determine whether a service provider's repeat infringer policy is implemented within the meaning of 512(i). For the reasons discussed below, the Court agrees with Judge Netburn that three such features are relevant here: (1) Escape's failure to keep adequate records of infringement; (2) Escape's practice of actively preventing copyright owners from collecting information necessary to issue DMCA takedown notifications; and (3) Escape's failure to terminate repeat infringers. Each of these shortcomings, standing alone, is sufficient to deny Escape's safe harbor defense.

a) Record KeepingBeginning with adequate recordkeeping, Judge Netburn correctly noted that because [t]he purpose of subsection 512(i) is to deny protection to websites that tolerate users who flagrantly disrespect copyrights, courts have recognized that service providers that purposefully fail to keep adequate records of the identity and activities of their users and fail to terminate users despite their persistent and flagrant infringement are not eligible for protection under the safe harbor. Capitol Records, Inc. v. MP3tunes, LLC, 821 F.Supp.2d 627, 637 (S.D.N.Y.2011) (MP3tunes ) (citations omitted); see also Disney Enters. v. Hotfile Corp., No. 1120427CIVWILLIAMS, 2013 U.S. Dist. LEXIS 172339, at *67 (S.D.Fl. Sept. 20, 2013) (Hotfile ) ([A] reasonable policy must be capable of tracking infringers.). Indeed, if records of infringement are not kept, it is impossible to know whether repeat infringement is occurring

*7 Prior to Judge Netburn's Report, Escape consistently argued that it did not need to track repeat infringement because repeat infringement could not occur under its one strike policy. For example, Escape's opposition to summary judgment stated that because it is Escape's policy to disable a user's uploading privileges following the receipt of one notice ... there is no necessity to search for repeat infringers. Opp'n FN3 at 36 n. 14; see also Semel Decl. Ex. 1 (Hostert Dep. 136:12140:23). Similarly, EMI's Local Rule 56.1 statement noted that Escape has no policy to try to identify repeat infringers that are using Grooveshark. RSUF 91. Disputing this fact in its counter-statement, Escape stated that it has a one strike policy of terminating the uploading privileges of users associated with DMCA takedowns, RSUF 91, but this response does not actually dispute the fact that Escape does not try to identify repeat infringers. In addition, EMI provided evidence that Escape does not keep an independent record of the instances in which a user has received multiple DMCA takedown notices. RSUF 98. Escape countered this fact by arguing that Escape's database includes records of every DMCA takedown processed, including the associated users, RSUF 98 (emphasis added), which essentially states that Escape could review its entire database to identify repeat infringers, but it does not controvert the fact that Escape does not keep an independent record of repeat infringers. These facts led Judge Netburn to conclude that Escape does not try to identify repeat infringers and fails to keep records that would allow it to do so. R & R 64.

FN3. Opp'n stands for Escape's opposition to EMI's motion for summary judgment (Dkt. No. 77).

Now, however, Escape's objection retreats from its earlier contention that it does not need to keep records of repeat infringement under its one strike policy. Nonetheless, like its responses to EMI's Local Rule 56.1 statement, its objection fails to point to admissible evidence showing that it actually tries to identify repeat infringers who are using Grooveshark. For example, Escape's objection provides a detailed description of how it records the removal of files in response to DMCA notices, inter alia, by moving data contained in its UsersFiles' table, which links each file on Grooveshark with the accountholder who submitted it, to a related data table entitled Deleted_UserFiles. Obj. 22. But Escape avoids mentioning that this Deleted Database does not distinguish between files deleted due to DMCA takedown notices and files deleted due to other reasons; i.e., this database is not an independent record of infringement.

Due to the importance of adequate recordkeeping to the repeat infringer policy requirement, the Court agrees with Judge Netburn that because Escape purposefully fails to keep adequate records of repeat infringement, it does not satisfy the 512(i) eligibility condition. Accord Hotfile, 2013 U.S. Dist. LEXIS 172339, at *28 (finding 512(i) not satisfied where the service provider's repeat infringer policy was not tied to notices of infringement it received from copyright owners, and the service provider did not track the notices and did not base its policy on how many notices were associated with certain users (such as by flagging them).); see also MP3tunes, 821 F.Supp.2d at 637.

b) Organization of UserSubmitted Files*8 Not only does Escape fail to keep adequate records of repeat infringement, but it also employs a practice that prevents copyright owners from being able to identify repeat infringement in the first place. As Judge Netburn explained, Grooveshark's site organizes multiple files containing the same song together, but only the Primary File can be streamed by Grooveshark users. RSUF 117. When Escape receives a DMCA takedown notice for files that infringe a copyrighted work, only the Primary File linked to a song is removed, and, if there are NonPrimary Files associated with that same song, the song remains available to Grooveshark users because a new Primary File will be selected automatically from the NonPrimary Files the next time the song is selected for streaming. RSUF 11922.FN4 As aptly described by EMI's expert, the system acts as a technological Pez dispenser: Each time a Primary File for a song is removed due to a DMCA takedown notice, a NonPrimary File is slotted in to take its place, with the process continuing until there are no remaining NonPrimary Files for that particular song, and there is nothing to keep the NonPrimary Files from replenishing. Because it is not possible for content owners to obtain uniform resource locators (URLs) for NonPrimary Files, RSUF 124, and because the only URL visible to a user and content owners is the URL for the Primary File for a song, RSUF 125, content owners must submit successive takedown notices even for NonPrimary Files slotted behind Primary Files that have already received takedown notices. Judge Netburn concluded that this practice may actively prevent copyright owners from collecting information needed to issue [DMCA] notifications' in a manner that would have any meaningful consequence. R & R 65 (quoting CCBill, 488 F.3d at 1109).

FN4. Escape disputed this statement of fact, but its citation to paragraphs 1317 of the Hostert Declaration did not controvert this fact.

In its objection, Escape latches on to Judge Netburn's use of the word may to argue that she made an equivocal statement [that] merely identifies a factual issue for determination at trial, rather than invalidating Escape's DMCA defense as a matter of law. Obj. 24. But Escape does not dispute any of the material facts at issue. Rather, its own description of its whack-a-mole practice belies any genuine dispute of material fact: [T]he sole effect of Escape's primary file practice is that only one of the grouped files is available on the website at a time, and thus visible to content owners [such as EMI]. While this may require content owners such as EMI to issue DMCA notifications seriatimi.e., a notification addressed to the primary file, followed by Escape's removal of the content, and then, if the next primary file contains the same recording, issuance of a subsequent notice, etc.it does not prevent copyright owners from policing the site. Obj. 2425. Thus, Escape acknowledges that because of the way it organizes user-submitted files, content owners can only see URLs for Primary Files. It further acknowledges that it forces content owners to submit successive notifications for the NonPrimary Files slotted behind the Primary File even though the whole purpose of organizing the files in this way is to group together files representing the same song.

*9 Other courts have rejected DMCA safe harbor protection for service providers employing similar practices that actively prevent copyright owners from enforcing DMCA takedown notifications in a meaningful way. In In re Aimster Copyright Litigation, for example, the defendant service provider instructed users on how to transfer their files in encrypted form, which led the court to conclude that [a]dopting a repeat infringer policy and then purposely eviscerating any hope that such a policy could ever be carried out is not an implementation as required by 512(i). 252 F.Supp.2d 634, 659 (N.D.Ill.2002). On appeal, the Seventh Circuit affirmed, noting that [f]ar from doing anything to discourage repeat infringers of the plaintiffs' copyrights, Aimster invited them to do so, showed them how they could do so with ease using its system, and by teaching its users how to encrypt their unlawful distribution of copyrighted materials disabled itself from doing anything to prevent infringement. In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir.2003). Here, Escape did not teach its users how to encrypt their files to hide them from copyright ownersit hid the files on its own. Therefore, the Court agrees with Judge Netburn that the undisputed facts demonstrate that the way Escape organized user-submitted files actively prevented copyright owners from being able to issue meaningful DMCA takedown notifications, which is an independent basis for concluding that it did not implement a repeat infringer policy as 512(i) requires. Accord CCBill, 488 F.3d at 1109 (We hold that a service provider implements' a policy if it has a working notification system, a procedure for dealing with DMCA-compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue such notifications. (citing Ellison, 357 F.3d at 1080; Corbis, 351 F.Supp.2d at 110203; In re Aimster Copyright Litig, 252 F.Supp.2d at 659).

c) Termination of Repeat InfringersOn top of the two above-noted problems with the implementation of Escape's repeat infringer policy, Judge Netburn found what this Court deems an even more fundamental problem with Escape's policy: As implemented, it does not actually provide[ ] for the termination ... of subscribers and account holders ... who are repeat infringers. R & R 68 (quoting 512(i)(1)(A)). Here it is important to distinguish between the policy that Escape informs its users of and the policy it purports to follow. The policy contained in Grooveshark's Terms of Service does provide for terminating the accounts of repeat infringers:

Should [Escape] discover or be informed that you have posted User Content for which you do not personally own the copyright or otherwise do not have the necessary authority from the copyright owner, [Escape] may take all appropriate steps to rectify your noncompliance, including without limitation, disabling your ability to upload User Content to the Service, unless you provide [Escape] with a counter notification of your right to upload such User Content in compliance with our Copyright Policy. Should [Escape] discover or be informed that you continue to upload User Content for which you do not personally own the copyright or otherwise do not have the necessary authority from the copyright owner after [Escape] has made reasonable efforts to disable your ability to do so, you will be considered a repeat infringer, and [Escape] will terminate your account and delete all data associated with your account; remove all of the User Content you have uploaded/submitted to the Site; and use its reasonable efforts to prohibit you from signing up for another User account in the future.

*10 Semel Decl. Ex. 14 at 4. But, as noted above, it is undisputed that Escape does not actually follow this policy; instead, it follows its one strike policy under which it purports to terminate the uploading privileges of first-time infringers and, because it does not track repeat infringement, it never determines whether a user should be deemed a repeat infringer. Thus, under Escape's one strike policy, the most severe consequence for a repeat infringer is loss of his or her uploading privilegesEscape has not and will not terminate a repeat infringer's account regardless of the level of repeat infringement. Examining the statutory text and relevant case law, Judge Netburn concluded that such a policy does not implement the type of repeat infringer policy that 512(i) requires. Once again, the Court finds Judge Netburn's rationale persuasive and Escape's objections without merit.

First, Escape contends that no court decision has actually held that termination necessarily means complete eradication of a user's account and deletion of all related content, and Judge Netburn does not cite to any such decision. Obj. 20. But just because there is no court opinion on point does not mean that Judge Netburn's analysis of the statutory language at issue here was erroneous. Rather, in navigating these uncharted waters, Judge Netburn correctly noted that the DMCA's safe harbors, as with all immunities from liability[,] should be narrowly construed. MP3tunes, 821 F.Supp.2d at 636 (citing United States v. Texas, 507 U.S. 529, 534 (1993)). With this in mind, she began with the plain meaning of termination, which is defined as [t]he act of ending something; extinguishment and [t]he end of something in time or existence; conclusion or discontinuance. Black's Law Dictionary (9th ed.2009). This definition suggests that Congress intended service providers to have a policy in place that would end or discontinue the accounts of repeat infringers, not something short of that such as limiting repeat infringers' user privileges. Escape offers no textual support for a contrary reading.

Second, Escape criticizes Judge Netburn for looking at the DMCA as a whole to determine the meaning of termination under 512(i). Judge Netburn observed that 17 U.S.C. 512(j), which addresses injunctive relief available under the DMCA, provides that the court may grant [a]n order restraining the service provider from providing access to a subscriber or account holder of the service provider's system or network who is engaging in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order. 512(j)(1)(ii) (emphasis added). This language is in contrast to 17 U.S.C. 512(g), which shields service providers from liability for taking down content and provides that a service provider shall not be liable to any person for any claim based on the service provider's good faith disabling of access to, or removal of, material or activity claimed to be infringing or based on facts or circumstances from which infringing activity is apparent. 512(g)(1) (emphasis added). Thus, Judge Netburn pointed out that Congress knew how to differentiate between terminating account holders and disabling access to material or activity, e.g., upload capabilities, claimed to be infringing. Escape argues that the comparison to 512(g)(1) is irrelevant because it refers to treatment of content, not account holders, and thus its language does not illuminate what Congress meant by termination of account holders in 512(i). Obj. 20. But that is precisely the point. Escape's one strike policy prevents the uploading of content, but does not provide for the termination of ... account holders, which is what 512(i) requires.

*11 Moreover, Escape offers no authority for the point that limiting a repeat infringer's uploading privileges satisfies 512(i). Although few courts have expressly discussed the meaning of terminationlikely because the term is so clear as to be beyond doubtthe Court is not aware of any authority for the proposition that something short of complete termination of a repeat infringer's account satisfies 512(i). Rather, the case law indicates just the opposite. See, e.g., Capitol Records, LLC v. Vimeo, LLC, 972 F.Supp.2d 500, 513 (S.D.N.Y.2013) (Vimeo ) (finding that defendant demonstrate[d] that it took a clear position that those who chose to violate another's copyright would not be permitted to avail themselves of the service [defendant] provides); MP3tunes, 821 F.Supp.2d at 638 (noting that repeat infringers are blatant infringers that internet service providers are obligated to ban from their websites); Corbis, 351 F.Supp.2d at 1101 (describing approvingly a policy that informed those accused of copyright infringement ... that repeated violations could result in permanent suspension from Amazon sites); In re Aimster Copyright Litig, 252 F.Supp.2d at 659 (describing a repeat infringer as one whose access should be terminated); Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146, 117778 (C.D.Cal.2002) (Cybernet Ventures ) (The Court does not read [ ] 512 to endorse business practices that would encourage content providers to turn a blind eye to the source of massive copyright infringement ... until a court orders the provider to terminate each individual account. (citing Costar Grp., Inc. v. Loopnet, Inc., 164 F.Supp.2d 688, 705 (D.Md.2001))).

Furthermore, Escape is incorrect that Judge Netburn's interpretation fails to serve the goals of the statute. To the contrary, multiple courts have noted that the service provider must first establish that it adopted a policy providing for the termination of access for repeat infringers and that [t]his statutory requirement emanates from Congress' concern that those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing that access . Vimeo, 972 F.Supp.2d 500, 51213 (S.D.N.Y.2013) (quoting H.R.Rep. No. 105551, Pt. 1, at 61 (1998)) (emphasis added); see also S.Rep. No. 105190, at 52 (1998).

Third, Escape contends that Judge Netburn impermissibly appeals to equity to interpret the DMCA because she found that upholding Escape's practice of disabling uploads would benefit infringers' and allow Escape to further profit from repeat infringers' content. Obj. 20. The Court disagrees with Escape's characterization of this portion of Judge Netburn's analysis as an appeal to equity. Rather, Judge Netburn properly recognized that according to Escape the benefit of the DMCA safe harbor would take all the teeth out of the repeat infringer policy requirement. Other courts have similarly noted that [m]aking the entrance into the safe harbor too wide would allow service providers acting in complicity with infringers to approach copyright infringement on an image by image basis without ever targeting the source of these images. Cf. Cybernet Ventures, 213 F.Supp.2d at 1177 (citing 17 U.S.C. 512(c)(1)(C)).

*12 Thus, for all the reasons described above, the Court agrees with Judge Netburn's conclusion that Escape does not implement a policy providing for the termination of repeat infringers as 512(i) requires. Nor does the Court find any merit in Escape's objections to Judge Netburn's thorough and well-reasoned analysis. Moreover, Escape's improper recordkeeping, its primary file practice, and its failure to actually terminate repeat infringers each provide an independent ground for finding an absence of evidence to support Escape's entitlement to the DMCA safe harbor.

2. Reasonable ImplementationLikewise, the Court agrees with Judge Netbura that, even assuming Escape's one strike policy could satisfy 512(i)'s implementation requirement, its implementation of that policy is not reasonable, i.e., it is not carried out in appropriate circumstances. See Io Grp, Inc. v. Veoh Networks, Inc., 586 F.Supp.2d 1132, 1144 (N .D. Cal.2008) (noting that [a] service provider reasonably implements its repeat infringer policy if it terminates users when appropriate. (quoting CCBill LLC, 488 F.3d 1102 at 1111). For this portion of the analysis, the Court assumes that Escape's purported policy and practice of disabling the uploading capabilities of repeat infringers constitutes termination under 512(i)(1)(A). R & R 74. Therefore, the relevant question is whether Escape actually terminates the uploading privileges of repeat infringers under appropriate circumstances.

Although Judge Netburn cited multiple examples of Escape's failure to bar the uploading privileges of repeat infringers, see R & R 7478, perhaps the most troubling example is Escape's so-called DMCA Lite procedure. Under this procedure, if Escape receives a DMCA takedown notification, but concludes that it is defective, it will categorize it is a DMCA Lite takedown, which does not result in disabling the user's uploading ability. Escape deems takedown notifications defective if, for example, they are not signed under oath or do not adequately identify the location of the alleged infringement on Grooveshark. Opp'n 39. But to be effective under the DMCA, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially six delineated components. 512(c)(3)(A) (emphasis added). These six components help the service provider locate the infringing content and determine whether the request is made in good faith on the part of a copyright owner. Id. Since February 13, 2013, Escape has removed only 6,861 files, but 94.2% of these have been removed under its so-called DMCA Lite procedure. RSUF 147. As Judge Netburn noted, the fact that Escape deemed 94.2% of DMCA notifications defective, but was still able to identify and remove the files, belies its contention that the notification did not substantially comply with 512(c)(3)(A). Similarly, Escape offered no admissible evidence demonstrating how the vast majority of DMCA takedown notifications were effective enough for Escape to identify the user-submitted file, but so defective that they did not warrant terminating the user's uploading privileges.

*13 But perhaps the strongest indicator of Escape's failure to terminate the uploading privileges of repeat infringers in appropriate circumstances is the undisputed facts showing that hundreds or thousands of users were not stripped of their uploading privileges after receiving notices of infringement. Notably, 1,609 users received DMCA takedown notices for an upload that occurred after the user had already received a prior DMCA takedown notice. RSUF 143. These 1,609 users submitted 2,339,671 files that are still available in Grooveshark's active library. RSUF 143. And at least 3,323 users for whom there is documentation of infringement in Escape's database still have their uploading privileges enabled. RSUF 131. The failure of Escape's purported one strike policy is all the more alarming when one considers that 21,044 users who have received multiple DMCA takedown notices account for 7,098,634 uploads, or 35%) of all uploads to Grooveshark's active music library. RSUF 140.

In response to these statistics, Escape admits that EMI has shown ... that, in operating its one strike policy, Escape does not have in place a process to check whether certain repeat infringers' have slipped through the cracks. Obj. 23. Escape then states that [t]o the extent that [its] practice does not work as intended on any given occasion, for whatever reasonEMI has identified 1,609 such instances (or a mere 4.2% of the number of recorded infringers) (see Report at 63)it is likely that those accountholders who do fall through the cracks will properly be recorded as a result of the next DMCA notification addressed to one of their uploads. Obj. 23. But there is no reason to assume this would occur: As noted above, Escape argues that because it is Escape's policy to disable a user's uploading privileges following the receipt of one notice ... there is no necessity to search for repeat infringers. Opp'n at 36 n. 14. Thus, Escape would have no way of knowing if repeat infringers were slipping through the cracks because it makes no effort to track them. This admission alone demonstrates that Escape does not reasonably implement its own policy because it does not have a way of checking to make sure it is actually terminating users' uploading privileges in appropriate circumstances.

As this extensive discussion reveals, EMI has shown that there is an absence of evidence to support Escape's contention that it actually implements a repeat infringer policy or that its repeat infringer policy is implemented in appropriate circumstances. Therefore, because there is an absence of evidence to support Escape's satisfaction of the 512(i) eligibility condition, no reasonable jury could conclude that Escape is entitled to the 512(c) safe harbor. The Court need not reach the alternative arguments that Escape does not satisfy the remaining requirements of 512(c). In addition, because the Court concludes that Escape does not meet the eligibility conditions of the DMCA safe harbor, it need not reach the issue of whether the DMCA safe harbor extends to sound recordings fixed prior to 1972.

D. Release of Claims in the Distribution Agreement*14 Finally, Escape argues that certain agreements entered into between it and EMI limit EMI's possible recovery for copyright infringement. Escape objects to the portions of Judge Netburn's report discussing this issue, so the Court reviews de novo. Although the Court agrees with Judge Netburn's recommended outcome on this issue, the Court reaches this conclusion under slightly different reasoning.

By way of background, EMI first sued Escape for copyright infringement in May 2009. Capitol Records, LLC, et al. v. Escape Media Grp., Inc., 09 Civ. 04458(LMM) (S.D.N.Y. May 8, 2009). The parties ultimately settled that lawsuit and executed two separate contracts on September 24, 2009:(1) the Settlement Agreement; and (2) the Distribution Agreement. The Settlement Agreement provides that

[f]rom and after the date hereof, Escape Media shall not allow the copying, reproduction, distribution, public performance, and/or other exploitation of EMI recordings on, via, and/or in connection with the Grooveshark sites ... except pursuant to a valid and binding agreement allowing such copying, reproduction, distribution, public performance, and/or other exploitation of EMI recordings (an EMI Content Agreement), in accordance with the terms of such EMI Content Agreement.

McMullan Decl. Ex. 2 1.1. In exchange for $825,000, EMI released Escape from any and all causes of action that EMI has, had, or may claim to have, against [Escape] from the beginning of time to the present, through the Effective Date of this Agreement, solely relating to allegedly infringing or unauthorized use or exploitation of EMI Recordings on, via, and/or in connection with the Grooveshark sites. Id. at 5.1.

The Distribution Agreement granted Escape a license to distribute certain authorized EMI content on Grooveshark and established detailed terms governing that distribution. For example, the Distribution Agreement provided that use of EMI Content obtained from any entity other than EMI or an Approved Source is a material breach of this Agreement. McMullan Decl. Ex. 3 at 4.2. In turn, EMI agreed to supply Escape with EMI Content, which is defined as any ... materials containing any content made available by EMI to [Escape] owned or controlled by EMI. McMullan Decl. Ex. 3 at Ex. 1 19. In exchange for this license, Escape was to make certain payments and produce regular sales reports for the calculation of those payments.

On April 21, 2011, following EMI's notice of breach of the Distribution Agreement, the parties entered into a First Amendment to the Settlement and Distribution Agreements. McMullan Decl. 1617; Tarantino Decl. 30, Ex. D. The Amendment contained a release providing that EMI ... hereby remises and releases Escape Media of any and all claims and liability for or in respect of the Content/Usage/Accounting Claim for all periods prior to and including December 31, 2010, excepting only claims arising under this Amendment. Tarantino Decl. Ex. D 12. The Amendment further provided that

*15 [o]ther than as amended hereby and by the Exhibits hereto, the Settlement and Distribution Agreements, and all of the terms thereof, remain in full force and effect according to their terms. For the avoidance of doubt, unless explicitly amended herein, EMI Music's termination rights under the Distribution Agreement remain in full force and effect according to their terms.

Tarantino Decl. Ex. D. 14. Following an additional notice of breach, the parties entered into a Second Amendment of the Settlement and Distribution Agreements on November 29, 2011. McMullan Decl. 1617. On January 25, 2012, EMI provided Escape with a new notice of breach of the Distribution Agreement. McMullan Decl. Ex. 5. And on March 22, 2012, EMI provided Escape with a notice of material breach and termination of the Distribution Agreement. Tarantino Decl. Ex. E.

In short, Escape argues that EMI cannot prevail on its copyright infringement claims for post-March 22, 2012 streams of copyrighted sound recordings that were derived from files impermissibly uploaded prior to March 22, 2012, because the Settlement Agreement and Amendment to the Settlement and Distribution Agreement were still in force at this time. It is important to distinguish between claims based on uploads, which would presumably implicate EMI's reproduction and distribution rights, and claims based on streams of those uploads, which would presumably implicate EMI's public performance rights. Escape acknowledges that EMI explicitly restricted its claims for violation of the right of public performance to streams after March 22, 2012. Obj. 17 (emphasis added). Thus, EMI is not asserting copyright infringement claims for the uploads that occurred during the duration of the Distribution Agreement. But Escape nonetheless contends that EMI cannot press claims for streamsi.e., infringement of its public performance rightsthat occurred after March 22, 2012 if those streams were from files that Grooveshark users uploaded prior to March 22, 2012.

First, nothing in the parties' agreements can be construed to mean that EMI surrendered its entire bundle of rights under the Copyright Act for all time based on a Distribution Agreement that was terminated on March 22, 2012. EMI provided notice of breach of the Distribution Agreement to Escape and afforded Escape the opportunity and requisite time to cure the noticed breaches. Escape did not do so, which led EMI to terminate the Distribution Agreement as provided for in the Agreement. Going forward, whatever rights Escape had in the Distribution Agreement to stream EMI copyrighted content, regardless of when that content was acquired, ceased to exist.

Second, Escape's argument overlooks the fact that the Settlement Agreement, which remains in effect, provides that Escape media shall not allow the copying, reproduction, distribution, public performance, and/or other exploitation of EMI Recordings ... except pursuant to a valid and binding agreement allowing such copying reproduction, distribution, public performance, and/or other exploitation of EMI Recordings (an EMI Content Agreement). (emphasis added). In line with this understanding, EMI's March 22, 2012 notice of material breach and termination stated that Pursuant to Paragraph 13.3 of the Distribution Agreement, we hereby demand that Grooveshark: (1) immediately cease any exploitation of EMI Content, (b) destroy all EMI Content and EMI Confidential Information in its possession or control and certify the same to EMI in writing. Assuming that EMI could not bring a breach-of-contract claim based on the impermissible user uploads during the duration of the Distribution Agreement, Escape still did not have the right to allow the ... public performance [i.e., streaming] ... of EMI Recordings of those impermissible uploads following termination of the Distribution Agreement after March 22, 2012 based on the still-in-force Settlement Agreement.

*16 Nor is this conclusion regarding post-March 22, 2012 streams called into question by the limited authority that Escape cites in support of its theory. Escape relies on Graham v. James for the proposition that [a] copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement. 144 F.3d 229, 236 (2d Cir.1998) (citing Jacob Maxwell, Inc. v. Veeck, 110 F.3d 749, 753 (11th Cir.1997); Peer Int'l Corp. v. Pausa Records, Inc., 909 F .2d 1332, 133839 (9th Cir.1990)). Graham further observed that, [g]enerally, if the [licensee's] improper conduct constitutes a breach of a covenant undertaken by the [licensee] ... and if such covenant constitutes an enforceable contractual obligation, then the [licensor] will have a cause of action for breach of contract, not copyright infringement. Id. at 236 (citing 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright 10.15[A], at 10120). However, as the several courts of this Circuit have found, use of copyrighted material after a license to use the material has expired gives rise to [a] claim for copyright infringement. FN5 Clinical Insight, Inc. v. Louisville Cardiology Med. Grp., PSC, No. 11CV6019T, 2013 U.S. Dist. LEXIS 97689, at *33 (W.D.N.Y. July 12, 2013) (citing Marshall v. New Kids On The Block Partnership, 780 F.Supp. 1005, 1009 (S.D.N.Y.1991) (Case law in this Circuit indicates that a copyright licensee can make himself a stranger to the licensor by using the copyrighted material in a manner that exceeds either the duration or the scope of the license.); Wu v. Pearson Educ, Inc., 277 F.R.D. 255, 267 (S.D.N.Y.2011) (After expiration of a license, further exercise by the licensee of the licensed exploitation rights constitutes copyright infringement.); Basquiat v. David DeSanctis Contemporary Art, Inc., No. 09 Civ. 1025(PKC), 2010 U.S. Dist. LEXIS 116292, at *3 (S.D.N.Y. Oct. 29, 2010) (A sale by a licensee after the expiration of a license may amount to copyright infringement.)). In sum, the parties' agreements do not prevent EMI from bringing copyright infringement claims based on the continued exploitation of user uploads that occurred prior to March 22, 2012.

FN5. For this reason, the relevant cut-off date for EMI's copyright claims based on streaming content is March 22, 2011, not December 31, 2010 as Judge Netburn appeared to believe. R & R 41. December 31, 2010 is the purported release-of-claims date while March 22, 2011 is the agreement's termination date. Thus, while EMI is correct that Escape cannot quote any release language covering the period December 22, 2011 to March 22, 2011, EMI Resp. 16 (Dkt. No. 97), the case law is clear that claims for copyright infringement arising during this time period would be limited to breach of contract in light of the parties' agreement. But as noted in the text, Escape's argument is incorrect insofar as it concerns continued exploitation of EMI content that it received prior to March 22, 2011.

IV. CONCLUSIONFor the reasons stated herein, Judge Netburn's recommendations are adopted in full. Therefore, EMI's motion for summary judgment as to its Fifth and Sixth Claims for federal and common law copyright infringement is GRANTED except with respect to its claims for direct infringement of its right of reproduction. This resolves Dkt. No. 71.

The Court hereby schedules a case management conference for Friday, May 8, 2015 at 11:30 a.m. No later than May 1, 2015, the parties shall submit a joint letter to the Court providing proposed trial dates and a proposed schedule for pre-trial submissions. The letter shall also indicate when further settlement talks will take place and whether the parties would like a referral to the Magistrate Judge or the Court-annexed mediation program for settlement.

*17 SO ORDERED.

REPORT AND RECOMMENDATIONSARAH NETBURN, United States Magistrate Judge.TO THE HONORABLE ALISON J. NATHAN:

INTRODUCTIONIn 1999, a teenage college dropout finished writing software for an internet service called Napster that would allow people to swap music stored on their computers. Six months after the service was released, 18 record companies filed a lawsuit to shut it down. Since then, content-sharing websites have proliferated. Listening to music obtained free from others over the internet has become increasingly common; so too have lawsuits that pit corporate copyright owners against emergent online service providers in disputes over the use of copyrighted musical works. This is such a lawsuit.

Before the Court is the plaintiff EMI's motion for summary judgment on its copyright infringement claims against Escape Media Group, which operates the free music-streaming website Grooveshark.com. Like many recent copyright lawsuits against online service providers, this case turns not on whether Grooveshark exploits EMI's copyrighted works without authorization, but on whether Escape can secure immunity from monetary liability for any infringing activity under the Digital Millennium Copyright Act.

After considering the papers submitted in support of and in opposition to EMI's summary judgment motion, as well as the arguments advanced by the parties at the April 29, 2014 hearing, the Court recommends that EMI's motion for summary judgment be GRANTED IN PART and DENIED IN PART. Specifically, the Court recommends finding that Escape, as a matter of law, is not entitled to an affirmative defense under the Digital Millennium Copyright Act, and that summary judgment should be granted in favor of EMI on its claims for direct infringement of the right of performance under federal law, secondary infringement under federal law for both contributory and vicarious infringement, and direct and secondary infringement under New York common law for copyrighted works not covered by the Copyright Act. The Court recommends that EMI's motion be denied with respect to its claim for direct infringement of its right of reproduction.

PROCEDURAL BACKGROUNDOn August 30, 2012, the plaintiff, Capitol Records, LLC, d/b/a EMI Music North America (EMI), brought this action against Escape Media Group, Inc. (Escape), alleging claims for: (1) copyright infringement, in violation of the Copyright Act of 1976 (the Copyright Act), 17 U.S.C. 101, et seq.; (2) breach of contract as to the parties' Digital Distribution Agreement; (3) breach of contract as to the parties' Settlement Agreement; (4) unjust enrichment; (5) unfair competition; and (6) common law copyright infringement. Escape answered the complaint on October 15, 2012, asserting several affirmative defenses, including that Escape is immune from EMI's copyright infringement claims under the safe harbor provisions of the Digital Millennium Copyright Act (the DMCA), 17 U.S.C. 512, et seq. On July 16, 2013, Escape stipulated to liability on EMFs claim for breach of the Digital Distribution Agreement but left open the question of damages. The Honorable Alison J. Nathan referred this matter to me for dispositive motions on October 24, 2013.

*18 Motions for summary judgment in this action were due on December 20, 2013. Because the parties indicated that they might seek to seal portions of EMI's anticipated summary judgment motion, the Court permitted the parties to exchange their motion papers privately and then confer on the issue of a motion to seal, which the Court would resolve before allowing any motion papers to be filed on ECF.FN1 On March 4, 2014, the Court received paper copies of all briefs and evidence submitted in support of and in opposition to EMI's motion for summary judgment.

FN1. On March 11, 2014, the parties emailed the Court a joint application for leave to file certain documents under seal or with redactions. The Court held a conference on that application on May 15 and issued a related order on May 16, 2014. Consistent with that order, the parties filed their motion papers on ECF on May 21, 2014.

In support of its motion, EMI submitted the following documents: (1) Statement of Material Facts (SMF); (2) Declaration of Benjamin Semel (the Semel Declaration), attaching Exhibits 1 through 20; (3) Declaration of Ellis Horowitz (the Horowitz Declaration), attaching Exhibits 1 through 13; and (4) Declaration of Alasdair McMullan (the McMullan Declaration), attaching Exhibits 1 through 32.

In opposition to EMFs motion, Escape submitted the following documents: (1) Response to Statement of Material Facts (Response SMF); (2) Declaration of Matthew Giger (the Giger Declaration), attaching Exhibits A through F; (3) Declaration of Samuel Tarantino (the Tarantino Declaration), attaching Exhibits A through E; (4) Declaration of Colin Hostert (the Hostert Declaration); and (5) Declaration of Cole Kowalski (the Kowalski Declaration).

In its reply, EMI submitted a Reply Statement of Material Facts (Reply SMF), and a second Declaration of Benjamin Semel (the Reply Semel Declaration), attaching Exhibits 1 through 11.

The parties appeared for a hearing on EMI's summary judgment motion on April 29, 2014.

DISCUSSIONI. Legal StandardUnder Rule 56 of the Federal Rules of Civil Procedure 56,FN2 the Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 32223 (1986). The moving party must show that under the governing law, there can be but one reasonable conclusion as to the verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). [T]he trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution. Gallo v. Prudential Residential Servs., LP, 22 F.3d 1219, 1224 (2d Cir.1994).

FN2. Unless otherwise noted, all Rules cited in this report refer to the Federal Rules of Civil Procedure.

The moving party bears the initial responsibility of informing the district court of the basis for its motion and identifying the matter that it believes demonstrate[s] the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The substantive law governing the case will identify those facts that are material and [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson, 477 U.S. at 248. Even where facts are disputed, in order to defeat summary judgment, the nonmoving party must offer enough evidence to enable a reasonable jury to return a verdict in its favor. Byrnie v. Town of Cromwell, Bd. of Educ., 243 F.3d 93, 101 (2d Cir.2001).

*19 In determining whether summary judgment is appropriate, the Court must resolve all ambiguities and draw all reasonable inferences in the light most favorable to the non-moving party. See Scott v. Harris, 550 U.S. 372, 378 (2007); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary judgment is improper if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the non-moving party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir.1994). To create a disputed fact sufficient to deny summary judgment, the non-moving party must produce evidence in the record and may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible[.] Ying Jing Gan v. City of New York, 996 F.2d 522, 532 (2d Cir.1993). [R]ather his response, by affidavits or otherwise as provided in the Rule, must set forth specific facts demonstrating that there is a genuine issue for trial. Wright v. Goord, 554 F.3d 255, 266 (2d Cir.2009) (citation and internal quotation marks omitted).

In addition, the district court may not rely solely on the statement of undisputed facts contained in the moving party's [Local Civil] Rule 56.1 statement. It must be satisfied that the citation to evidence in the record supports the assertion. Vt. Teddy Bear Co. v. 1800 Beargram Co., 373 F.3d 241, 244 (2d Cir.2004) (citing Giannullo v. City of New York, 322 F.3d 139, 143 n. 5 (2d Cir.2003) (stating that not verifying the assertions in the Rule 56 .1 statement would derogate the truth-finding functions of the judicial process by substituting convenience for facts)). The Court of Appeals has long recognized that [because] summary judgment is a drastic device that cuts off a party's right to present his case to a jury, ... the moving party bears a heavy burden of demonstrating the absence of any material issues of fact. Nationwide Life Ins. Co. v. Bankers Leasing Ass'n, Inc., 182 F.3d 157, 160 (2d Cir.1999)) (internal quotation marks and citations omitted); see also Am. Home Assurance Co. v. ZIM JAMAICA, 418 F.Supp.2d 537, 542 (S.D.N.Y.2006) (Because summary judgment is a drastic device, the movant's burden is a heavy one.).

Where, as here, a plaintiff uses a summary judgment motion, in part, to challenge the legal sufficiency of an affirmative defenseon which the defendant bears the burden of proof at triala plaintiff may satisfy its Rule 56 burden by showing that there is an absence of evidence to support [an essential element] of [the non-moving party's case]. Nw. Mut. Life Ins. Co. v. Fogel, 78 F.Supp.2d 70, 73 (E.D.N.Y.1999) (quoting FDIC v. Giammettei, 34 F.3d 51, 54 (2d Cir.1994)) (brackets in original). See also G Investors Holding LLC v. Lincoln Ben. Life Co., Inc., 09 Civ. 2980(ALC)(KNF), 2012 WL 4468184, at *4 (S.D.N.Y. Sept. 25, 2012) (quoting Brady v. Town of Colchester, 863 F.2d 205, 211 (2d Cir.1988) (When considering a motion for summary judgment, the district courts must ... be mindful of the underlying standards and burdens of proof ... because the evidentiary burdens that the respective parties will bear at trial guide district courts in their determination of summary judgment motions. ) (internal citation omitted). A plaintiff moving for summary judgment on its affirmative claims, however, bears a much greater initial burden; it must show that the evidence supporting its claims is so compelling that no reasonable jury could return a verdict for the defendant. SEC v. Meltzer, 440 F.Supp.2d 179, 187 (E.D.N.Y.2006); accord G Investors Holding LLC, 2012 WL 4468184, at *4.

II. Evidentiary Objections*20 In its opposition, Escape objects to the following portions of the declaration of Ellis Horowitz, EMFs expert witness: (1) statements that rely on analyses of Escape's data conducted using Copysense, software created by the company Audible Magic, on the ground that Audible Magic is functioning as an expert witness but was not disclosed properly as such; (2) data analyses and findings that EMI did not disclose timely to Escape; and (3) statements concerning the supposed purpose or intent of Grooveshark's design and procedures. (Opp'n at 2223.) In its reply, EMI objects to the Kowalski Declaration on the procedural ground that Kowalski was not disclosed properly as a witness and the substantive grounds that Kowalski's testimony is diversionary, not accurate, unsupported by evidence, and submitted to create a sham dispute over facts. (Reply at 2425.) For the following reasons, the Court recommends (1) overruling Escape's objections to the Horowitz Declaration, and (2) striking the Kowalski Declaration under Rule 37(c)(1).FN3

FN3. The parties' evidentiary objections are based primarily on Rule 37, which generally permits a court to preclude evidence that was not produced or for which the source was not disclosed during discovery in compliance with Rule 26. Magistrate judges may rule on nondispositive pretrial matters, including discovery disputes such as requests for preclusion of undisclosed evidence under Rule 37. See Fed.R.Civ.P. 72(a); 28 U.S.C. 636(b)(1)(A) (stating that such rulings are subject to review under a clear error standard); Arista Records, LLC v. Doe 3, 604 F.3d 110, 116 (2d Cir.2010); Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir.1990). Nevertheless, because the parties here did not file Rule 37 motions, and because the evidentiary objections are substantially intertwined with the summary judgment motion as a whole, I find it appropriate in this circumstance to recommend a disposition on these issues as part of my overall recommendation on the plaintiff's dispositive motion for summary judgment. Cf. 28 U.S.C. 636(b)(1)(B).

A. Legal Standards for Objections to Evidence

1. Objections Based on Inadmissibility

The admissibility of evidence the parties submit in connection with a motion for summary judgment must be resolved as a threshold issue. See Fed.R.Civ.P. 56(e); Colon ex rel. Molina v. BIC USA, Inc., 199 F.Supp.2d 53, 68 (S.D.N.Y.2001) ([T]he court must evaluate evidence for admissibility before it considers that evidence in ruling on a summary judgment motion.) (citing Fed.R.Evid. 104(a)). Although district courts may rely only on admissible evidence when granting a motion for summary judgment, Spiegel v. Schulmann, 604 F.3d 72, 81 (2d Cir.2010), they have wide discretion in determining which evidence is admissible, LaSalle Bank Nat. Ass'n v. Nomura Asset Capital Corp., 424 F.3d 195, 20506 (2d Cir.2005) (quoting Nora Beverages, Inc. v. Perrier Group of Am., Inc., 164 F.3d 736, 746 (2d Cir.1998)). At the summary judgment stage, district courts have discretion to consider evidence in inadmissible form, so long as the content would be admissible at trial. See Century Pac, Inc. v. Hilton Hotels Corp., 528 F.Supp.2d 206, 215 (S.D.N.Y.2007) aff'd, 354 F. App'x 496 (2d Cir.2009) (Hearsay evidence is admissible at the summary judgment stage if the contents would otherwise be admissible at trial.) (citing Santos v. Murdock, 243 F.3d 681, 683 (2d Cir.2001)); Pathania v. Metro. Museum of Art, 11 Civ. 2119(JMA), 2013 WL 1182076, at *19 (E.D.N.Y. Mar. 21, 2013) (Even if an affidavit or declaration would not be admissible at trial, a court may consider it on a summary judgment motion if it is based on personal knowledge and sets forth facts to which the declarant could testify at trial and that would be admissible in evidence. ) (quoting Schaghticoke Tribal Nation v. Kempthorne, 587 F.Supp.2d 389, 396 (D.Conn.2008)); Masters v. F.W. Webb Co., 03 Civ. 6280L (DGL), 2008 WL 4181724, at *12 (W.D.N.Y. Sept. 8, 2008) (Applying [Rule 56(e) ], courts have ... held that otherwise admissible evidence may be submitted in inadmissible form at the summary judgment stage, though at trial it must be submitted in admissible form. ) (quoting McMillian v. Johnson, 88 F.3d 1573, 1584 (11th Cir.1996)).

2. Objections Based on Failure to Disclose*21 Before discovery, parties have a duty to make initial disclosures under Rule 26, which includes disclosing the identities of persons likely to have discoverable information ... that the disclosing party may use to support its claims or defenses and the identities of persons that may present evidence as expert witnesses at trial. Fed.R.Civ.P. 26(a)(1)(A)(i), 26(a)(2)(A). After the discovery phase has begun, a party who has responded to an interrogatory must supplement or correct its disclosure or response ... in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing. Fed.R.Civ.P. 26(e)(1)(A).

Under Rule 37(c)(1), if a party fails to make these required disclosures, a district court may prohibit the party from using that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. Fed.R.Civ.P. 37(c)(1). The Rule further states that, [i]n addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard ... may impose other appropriate sanctions, including ones that are less severe or more severe than precluding the evidence. Id. Rule 37(c)(1) is intended to to prevent the practice of sandbagging an opposing party with new evidence.' Haas v. Delaware & Hudson Ry. Co., 282 F. App'x 84, 86 (2d Cir.2008) (quoting Ebewo v. Martinez, 309 F.Supp.2d 600, 607 (S.D.N.Y.2004)); see also Am. Stock Exch., LLC v. Mopex, Inc., 215 F.R.D. 87, 93 (S.D.N.Y.2002) (stating that the purpose of Rule 37(c)(1) is to prevent surprise or trial by ambush) (internal quotation marks omitted); Gunawan v. Sake Sushi Rest., 09 Civ. 5018(ALC), 2011 WL 3841420, at *4 n. 1 (E.D.N.Y. Aug. 26, 2011). Exclusion of evidence under Rule 37(c)(1) does not require a showing of bad faith. Design Strategy, Inc. v. Davis, 469 F.3d 284, 296 (2d Cir.2006).

In Design Strategy, Inc. v. Davis, the Court of Appeals affirmed a district court's decision to preclude evidence that was not disclosed in accordance with Rule 26, but found that the district court err[ed] in its determination that preclusion is mandatory under Rule 37(c)(1) once the trial court finds that there is no substantial justification and the failure to disclose is not harmless. 469 F.3d at 297. The Court of Appeals found the following language from the district court to be a correct statement of the Rule and of the court's discretion in applying it. Id. at 298.

Given that Defendants have moved to preclude Doughty's testimony and that the [c]ourt held a telephone conference on this matter, it is not necessary to invoke Rule 37(c)(1)'s automatic sanction in order to preclude Doughty's testimony. Rather, Rule 37(c)(1) provides that [i]n addition to or in lieu of [the automatic sanction], the court, on motion and after affording an opportunity to be heard, may impose other appropriate sanctions. The Court precludes Doughty's testimony in an exercise of this discretion.

*22 Id. The district court's reference to Rule 37(c)(1)'s automatic sanction is derived from the 1993 Advisory Committee Notes to Rule 37, which the Court of Appeals found cannot be squared with the plain language of Rule 37(c)(1) setting forth a range of sanctions available to courts upon a motion and after affording an opportunity to be heard. Id.

The Court finds the prudent approach here is to construe the parties' requests to preclude certain witness declarations under Rule 37(c)(1) and to apply the analysis for discretionary application of an appropriate sanction prescribed by the Court of Appeals. Cf. Ritchie RiskLinked Strategies Trading (Ireland), Ltd. v. Coventry First LLC, 280 F.R.D. 147, 156 (S.D.N.Y.2012) (Yet despite the seeming self-executing nature of the preclusion sanction contained in the Rule, imposition of the preclusion sanction remains within the trial court's discretion.) (internal citation omitted). These applications, coupled with the parties' opportunity to be heard at the April 29, 2014 hearing, allow the Court to preclude the challenged evidence or issue other appropriate sanctions if justified by the following four factors established in Patterson v. Balsamico, which expand upon the substantially justified or harmless inquiry: (1) the party's explanation for the failure to comply with the [disclosure requirement]; (2) the importance of the testimony of the precluded witness[es]; (3) the prejudice suffered by the opposing party as a result of having to prepare to meet the new testimony; and (4) the possibility of a continuance. 440 F.3d 104, 117 (2d Cir.2006) (internal quotation marks omitted, alterations in original).FN4 The Court is also guided by the observation that most courts in this district have found preclusion of evidence under Rule 37(c)(1) to be a drastic remedy that should be exercised with discretion and caution, Ebewo, 309 F.Supp.2d at 607, and only be applied in ... rare circumstances, Grdinich v. Bradlees, 187 F.R.D. 77, 79 (S .D.N.Y.1999). Accord Ritchie RiskLinked Strategies Trading (Ireland), Ltd, 280 F.R.D. at 15657 (referring to evidence preclusion under Rule 37(c)(1) as a harsh remedy and citing authorities for imposing the sanction rarely and cautiously); Granite State Ins. Co. v. Clearwater Ins. Co., 09 Civ. 10607(RKE), 2014 WL 1285507, at *11 (S.D.N.Y. Mar. 31, 2014). This formulation of the procedure for applying Rule 37(c)(1) is consistent with the principles embraced by the Court of Appeals in Design Strategy v. Davis and Patterson v. Balsamico.

FN4. Courts in this circuit have adhered to the four factors most strictly when analyzing pre-trial motions in limine. See, e.g., Design Strategy, Inc., 469 F.3d at 29697; Patterson, 440 F.3d at 11718; Fitzpatrick v. Am. Int'l Grp., Inc., 10 Civ. 0142(MHD), 2013 WL 5718465, at *34 (S.D.N.Y. Oct. 21, 2013). In the summary judgment context, however, many courts have declined to apply the four-factor test, instead focusing on whether the non-disclosure was justified and whether it was harmful or prejudicial. See, e.g., Granite State Ins. Co. v. Clearwater Ins. Co., 09 Civ. 10607(RKE), 2014 WL 1285507, at *11 (S.D.N.Y. Mar. 31, 2014); Mobileve, Inc. v. Picitup Corp., 928 F.Supp.2d 759, 766 (S.D.N.Y.2013); In re Methyl Tertiary Butyl Ether Products Liab. Litig., 00 Civ. 1898(SAS), 2014 WL 494522, at *24 (S.D.N.Y. Feb. 6, 2014); 24/7 Records, Inc. v. Sony Music Entm't, Inc., 566 F.Supp.2d 305, 31819 (S.D.N.Y.2008). But see Haas, 282 F. App'x at 8687 (applying the four-factor test).

B. Escape's Objections to the Horowitz Declaration

1. EMI's Allegedly Undisclosed Expert Testimony

In support of its summary judgment motion, EMI submits the declaration of its expert witness, Ellis Horowitz, which contains findings based on data analyses Horowitz conducted using Audible Magic software. Escape contends that Audible Magic is functioning as an expert witness whom EMI failed to disclose as required by Rule 26(a)(2). The Court thus must determine initially whether Audible Magic is an expert witness for the purposes of Rule 26(a) disclosures, and, if it is, must then determine if EMI's failure to disclose Audible Magic was either substantially justified or harmless and thus whether the related testimony should be precluded under Rule 37(c)(1).

*23 In his declaration, Horowitz provides a description of certain data and statistics concerning the Grooveshark system and opines on whether certain MP3 files [in Grooveshark's database] embodied sound recordings whose copyrights are owned by EMI. FN5 (Horowitz Decl. 6, 77.) Horowitz states that he identified the recordings embodied in the MP3s and identified the copyright owner of those recordings by using Copysense, content-recognition software developed by Audible Magic. Horowitz explains that Audible Magic's software is based on recognizing the unique content of an underlying audio work and creating a psychoacoustic fingerprint, which is then matched against a Global Rights Registry Database to identify the copyright owner. (Id. 78 (internal quotation marks omitted).) The Global Rights Registry Database is a large database of sound recording content submitted directly by content owners, including EMI. (Id.; see also AudibleMagic.com, Content ID Databases, www.audiblemagic.com/content-databases/ (last visited May 22, 2014) (Audible Magic's Music Database is one of the most complete content identification registries in the world, containing recognition signatures for tens of millions of titles that are continually submitted by music studios and content owners world-wide .).) FN6 In short, the Horowitz evidence submitted by EMI relies in part on Audible Magic's technology to demonstrate the fact that, and to what extent, EMI content is housed on Escape servers and streamed to Grooveshark users.

FN5. MP3s are digital music files created through a process colloquially called ripping. Ripping software allows a computer owner to copy an audio compact disk ... directly onto a computer's hard drive by compressing the audio information on the CD into the MP3 format. The MP3's compressed format allows for rapid transmission of digital audio files from one computer to another .... A & M Records. Inc. v. Napster, Inc., 239 F.3d 1004, 1011 (9th Cir.2001).

FN6. Horowitz cites to the Audible Magic website in paragraph 78 of his declaration. To the extent the website's content is not in the record, the Court takes judicial notice of the information on the website under Federal Rule of Evidence 201 for the purpose of ascertaining the service Audible Magic offers. Cf. Hendrickson v. eBay, Inc., 165 F.Supp.2d 1082, 1084, n. 2 (C.D.Cal.2001) (taking judicial notice of ebay.com as evidence of the the nature of eBay's business); Boarding Sch. Review, LLC v. Delta Career Educ. Corp., 11 Civ. 8921(DAB), 2013 WL 6670584, at *1 n. 1 (S.D.N .Y. Mar. 29, 2013) (The Court generally has the discretion to take judicial notice of internet material.).

Audible Magic's software and services involving audio and visual content have been cited and described similarly in several recent cases. See, e.g., UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1012 (9th Cir.2013) (Audible Magic's technology takes audio fingerprints' from video files and compares them to a database of copyrighted content provided by copyright holders. If a user attempts to upload a video that matches a fingerprint from Audible Magic's database of forbidden material, the video never becomes available for viewing.); Arista Records LLC v. Lime Wire LLC, 06 Civ. 05936(KMW), 2010 WL 10031251, at *6 (S.D.N.Y. Aug. 9, 2010) (defining Fingerprinting Technology, which is available from commercial vendors such as Audible Magic, as the most effective available means of content-recognition filtering based on recognizing the unique content of an underlying audio-visual work and detecting and preventing copying of that content); Arista Records LLC v. Myxer Inc., 08 Civ 03935(GAF)(JCX), 2011 WL 11660773, at *5 (C.D.Cal. Apr. 1, 2011) (By running a sound file through Audible Magic's Copysense software ..., Myxer can obtain high-level descriptive information, metadata, about the particular sound recording. This information includes whether the sound recording is owned by a particular record company, and whether the copyright owner seeks to have it blocked from Myxer's Website) (internal citations omitted); MetroGoldwynMayer Studios, Inc. v. Grokster, Ltd., 518 F.Supp.2d 1197, 120506 (C.D.Cal.2007) (... Audible Magic has a database of approximately 6 million acoustical fingerprints of musical sound recordings.... Companies such as Audible Magic claim to have a database of file hashes that are known to contain copyrighted content.). Audible Magic's technology is often used by online content providers to filter out infringing content in an attempt to comply with the Copyright Act and the DMCA. See, e.g., id.; Myxer, 2011 WL 11660773, at *5; UMG Recordings, Inc. v. Veoh Networks Inc., 665 F.Supp.2d 1099, 1103 (C.D.Cal.2009).

*24 Given the nature of Audible Magic's services and its software Copysense, Audible Magic plainly is not an expert witness here. Contrary to Escape's characterizations, EMI did not hire Audible Magic and Audible Magic did not provide testimony. (Opp'n at 11.) Audible Magic simply created Copysense, the software used by Horowitz to filter Grooveshark's database and obtain the results necessary to formulate his expert opinion. See Fed.R.Evid. 702. There is no authority to support a rule that a party must include the manufacturer of a tool used by its expert in its initial disclosures, nor could there be without, for instance, executives of calculator companies being subjected to constant depositions. Cf. Henry v. Champlain Enters., Inc., 288 F.Supp.2d 202, 22021 (N.D.N.Y.2003) (analyzing the reliability of an expert's methodologies, including the use of a software program and the use of specific valuation instruments, but not inquiring into whether the manufacturers of the software or instruments are third-party experts).

Further, even if Escape's characterization of Audible Magic's services in this litigation were accurate, such services would likely fall[ ] within the permissible scope of research and data collection done by third-party assistants to experts. Bd. of Trustees of AFTRA Ret. Fund v. JPMorgan Chase Bank, N.A., 09 Civ. 686(SAS), 2011 WL 6288415, at *1011 (S.D.N.Y. Dec. 15, 2011); see also Cedar Petrochem., Inc. v. Dongbu Hannong Chem. Co., Ltd., 769 F.Supp.2d 269, 285 (S.D.N.Y.2011) (finding expert testimony admissible where the experts have based their conclusions on reliable results from tests conducted by independent consultants). Going even further and accepting Escape's assertion that Audible Magic is a third-party expert, it is still not clear why Escape's objection should be sustained. EMI is not submitting Audible Magic's testimony, but rather Horowitz's expert opinions, which, arguendo, would be found to rely on hearsay evidence from Audible Magic. This would be likely permissible under the Federal Rules of Evidence. See United States v. Mejia, 545 F.3d 179, 197 (2d Cir.2008) (Under Rule 703 [of the Federal Rules of Evidence], experts can testify to opinions based on inadmissible evidence, including hearsay, if experts in the field reasonably rely on such evidence in forming their opinions.) (internal quotation marks omitted); Century Pac, Inc., 528 F.Supp.2d at 215.

Finally, Escape fails to show that it suffered any meaningful prejudice from EMI's failure to disclose Audible Magic, regardless of whether such a duty exists. Escape argues that EMI's failure to disclose Audible Magic's analysis has manifestly prejudiced Escape, as it has prevented Escape from obtaining documents and deposing Audible Magic on a number of topics affecting the reliability of its analysis. (Opp'n at 11.) Yet, Escape does not claim that a single MP3 file is incorrectly identified as an EMI work. Escape submits no evidence regarding its own music library and data to try to dispute the facts related to Horowitz's Audible Magic analyses. Escape's hypothetical and unsubstantiated prejudice is far from adequate to justify preclusion under Rule 37(c)(1), particularly where Escape possesses substantial information that would allow it to determine whether the Audible Magic analyses were reliable, without the need for additional depositions and document requests.

2. EMI's Allegedly Untimely Disclosure of Horowitz's Findings*25 Escape next argues that the Court should exclude Horowitz's analyses of Escape's data because they were never properly disclosed by EMI in connection with Horowitz's expert report. (Opp'n at 20.) Under Rule 26(a)(2)(b), a party who has designated an expert witness for trial must provide the expert report to the opposing party. [T]he report pertaining to the proposed opinions of an expert and their factual basis must be detailed and complete ... to ensure adequate trial preparation, including the opportunity for efficient follow-up discovery through deposition, if necessary. Lava Trading, Inc. v. Hartford Fire Ins. Co., 03 Civ. 7037(PKC), 2005 WL 4684238, at *67 (S.D.N.Y. Apr. 11, 2005) (quoting Fed.R.Civ.P. 26(a)(2) (B), 1993 Advisory Committee Notes, at 160, and citing Rule 26(b) (4)(a)). EMI does not contest Escape's allegation that the disclosed Horowitz report was not detailed and complete, but rather provides grounds for finding that, under Rule 37(c)(1), this failure was substantially justified or is harmless. At the outset, a review of the discovery timeline with respect to the data on which Horowitz relied is necessary for the Court to assess Escape's objection.

Escape produced a database table and a hard drive containing over 500,000 MP3s from its servers in September 2013. (Reply Semel Decl. 14.) Horowitz's expert report was served on October 25, 2013, the deadline set by the Court. (Id. 19.) On the same say, Escape produced additional database tables to EMI, including tables titled SongFiles and deletedSongFiles. (Id., Ex. 11.) On November 20, 2013, EMI produced 30 pages of documents containing Horowitz's data queries and statistical results. (Giger Decl. 8, Ex. F.) Per the Court's order, the deadline for depositions was November 22, 2013, a deadline which had been extended multiple times. On November 25, 2013, Escape deposed Horowitz. (Id., Ex. A (Horowitz Dep.).) The morning of the deposition, EMI delivered to Escape corrected versions of some of Horowitz's charts and graphs. (Horowitz Dep. at 71:474:14.) On December 4, 2013, Escape produced additional database tables to EMI, including a table titled Files, which is the complete centralized table Horowitz used to analyze Escape's MP3s. (Reply Semel Decl. 20, Ex. 10.)

Untimely expert submissions are not admissible [at trial] unless the proponent of the evidence can demonstrate that his delay in complying with the required deadlines was substantially justified or that it was harmless, that is, that it did not prejudice the other side. Lava Trading, Inc., 2005 WL 4684238, at *8 (citing Rule 37(c)(1)). Here, it appears that most, if not all, of Horowitz's untimely submissions were substantially justified, given that Escape produced database tables that were integral to [Horowitz's] analysis after Horowitz could have possibly included them in his expert report. (Semel Reply Decl. 19, 20.) In particular, Escape did not produce the full SongFiles database until October 25, 2013, the day that Horowitz's expert report was due. This database was necessary for Horowitz to run Query No. 1 and Query No. 6 of the Grooveshark database (Horowitz Decl., Ex. 7), the results of which supported several of Horowitz's conclusions (see, e.g., id. 24, 71, Ex. 9). Escape's argument that Horowitz failed to include in his expert report the statistical analyses he submits in his declaration, and which would have been impossible to include in the expert report because of Escape's late data production, is unavailing. Further, any prejudice to Escape is minimal; there is no risk here of surprise or trial by ambush for the following reasons. Am. Stock Exch., LLC, 215 F.R.D. at 93 (internal quotation marks omitted). First, Horowitz's findings at issue are derived from Esc