Case 2:20-cv-01218-RSL-MLP Document 166 Filed 04/16/21 Page 1 of 66 1 THE HONORABLE ROBERT S. LASNIK THE HONORABLE MICHELLE L. PETERSON 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE 8 VICKY CORNELL, individually, and in Case No. 2:20-cv-01218−RSL−MLP 9 her capacity, and as the Personal Representative of the Estate of Christopher THE SOUNDGARDEN DEFENDANTS’ 10 John Cornell a/k/a Chris Cornell, ANSWER AND AFFIRMATIVE DEFENSES, AND THE SOUNDGARDEN 11 Plaintiffs, PARTIES’ SECOND AMENDED COUNTERCLAIMS 12 v. SOUNDGARDEN, a purported JURY DEMAND 13 Washington General Partnership, KIM A. 14 THAYIL, MATT D. CAMERON, HUNTER BENEDICT SHEPHERD, RIT 15 VENERUS and CAL FINANCIAL GROUP, Inc., 16 Defendants. 17 ________________________________ 18 SOUNDGARDEN, a Washington General Partnership, SOUNDGARDEN 19 RECORDINGS LLC, a Delaware limited liability company, STAGE MUTHA 20 FAKIR, INC., a Washington Corporation, SG PRODUCTIONS, INC., a Washington 21 Corporation, KIM A. THAYIL, MATT D. 22 CAMERON, HUNTER BENEDICT SHEPHERD, 23 Counter-Plaintiffs, 24 v. 25 VICKY CORNELL, individually, and in her capacity as the Personal Representative 26 of the Estate of Christopher John Cornell a/k/a Chris Cornell, 27 Counter-Defendants.. 28 THE SOUNDGARDEN DEFENDANTS’ ANSWER AND AFFIRMATIVE DEFENSES, AND THE SOUNDGARDEN PARTIES’ SECOND AMENDED COUNTERCLAIMS (No. 2:20−cv−01218−RSL-MLP) –1 Case 2:20-cv-01218-RSL-MLP Document 166 Filed 04/16/21 Page 2 of 66 1 THE SOUNDGARDEN DEFENDANTS’ ANSWER AND AFFIRMATIVE DEFENSES, AND THE SOUNDGARDEN PARTIES’ SECOND AMENDED COUNTERCLAIMS 2 Defendants Soundgarden, a Washington general partnership (“Soundgarden”), Kim A. 3 Thayil (“Thayil”), Matt D. Cameron (“Cameron”) and Hunter Benedict Shepherd (“Shepherd” 4 together with Thayil and Cameron, the “Individual Defendants” or “Surviving Band Members” and 5 with Soundgarden the “Soundgarden Defendants”), by and through undersigned counsel and 6 pursuant to Federal Rules of Civil Procedure 12 and 13, hereby submit their Answer, Affirmative 7 Defenses, and Second Amended Counterclaims—joined by Soundgarden Recordings LLC (“SGR 8 LLC”), Stage Mutha Fakir, Inc. (“SMF”), and SG Productions, Inc. (“SG Productions”)—in 9 response to the Second Amended Complaint (“SAC”, Dkt. No. 139) filed by Plaintiffs Vicky 10 Cornell, individually and in her capacity as the Personal Representative of the Estate of Christopher 11 Cornell a/k/a Chris Cornell (“Plaintiffs”). 12 INTRODUCTORY STATEMENT 13 Pursuant to Federal Rules of Civil Procedure 12 and 13, the Soundgarden Defendants answer 14 Plaintiffs’ SAC and declare their affirmative defenses, and the Soundgarden Parties (the 15 Soundgarden Defendants plus SGR LLC, SMF, and SG Productions) assert counterclaims. The 16 counterclaims are titled “Second Amended Counterclaims” because Soundgarden and SGR LLC 17 have previously filed in this action Counterclaims (“Counterclaims”, Dkt. No. 68) and First 18 Amended Counterclaims (“FACC”, Dkt. No. 90-1). 19 This filing (Answer, Affirmative Defenses, and Second Amended Counterclaims) is not yet 20 procedurally required under Federal Rule of Civil Procedure 12(a)(4) until this Court’s final 21 resolution of the Motion to Dismiss the conversion count of the SAC filed by the Soundgarden 22 Defendants (Dkt. No. 142, “Motion to Dismiss SAC”). The Motion to Dismiss SAC was the subject 23 of a Report and Recommendation from this Court (Hon. Peterson) dated March 19, 2021 (“R&R”, 24 Dkt. No. 153), recommending granting the motion and dismissing Plaintiffs’ conversion claim 25 (Count III) and breach of fiduciary duty claim (Count IV) without leave to amend. On April 5, 2021, 26 Plaintiffs filed objections to the R&R (Dkt. No. 162) and the Motion to Dismiss SAC is now noted 27 before this Court (Hon. Lasnik) on May 23, 2021 (Dkt. No. 163). 28 THE SOUNDGARDEN DEFENDANTS’ ANSWER AND AFFIRMATIVE DEFENSES, AND THE SOUNDGARDEN PARTIES’ SECOND AMENDED COUNTERCLAIMS (No. 2:20−cv−01218− RSL-MLP)–2 Case 2:20-cv-01218-RSL-MLP Document 166 Filed 04/16/21 Page 3 of 66 1 The Soundgarden Parties make this filing at this time and in this form for three principal 2 reasons: 3 First, this filing is made pursuant to agreement with Plaintiffs and for the purposes of 4 streamlining this action and resolving certain procedural case complexities. Plaintiffs previously 5 filed a motion to dismiss certain of the original Counterclaims filed by Soundgarden and SGR LLC 6 in the Florida District Court before the action was transferred to Washington. See Motion to Dismiss 7 Counterclaims (Dkt. No. 74). The Motion to Dismiss Counterclaims was fully briefed under Florida 8 law and submitted to the Florida court. (Dkt. Nos. 74, 84, and 87). By stipulation with Plaintiffs 9 (Dkt. No. 90), Soundgarden and SGR LLC subsequently filed the FACC (Dkt. No. 90-1)—which 10 deleted two counts of the Counterclaims—specifying as follows: 11 Counter-Plaintiffs and Counter-Defendants further jointly stipulate that the filing of the First Amended Counterclaims does not and should not impact the pending 12 and fully-briefed partial Motion to Dismiss relating to various causes of action of the Counterclaims (See D.E. 74, 84, and 87). 13 14 See Joint Stipulation re Filing the FACC (Dkt. No. 90) ¶7. After the transfer from Florida to this 15 Court, the parties disclosed the pending Motion to Dismiss Counterclaims to this Court in their Joint 16 Status Report on November 3, 2020, and proposed the following procedural approach: “The parties 17 intend to notice this motion to dismiss for consideration on the Court’s calendar, and propose that 18 Plaintiffs and SGR LLC be granted leave to file supplemental briefs of no more than 5 pages limited 19 to any issues concerning Washington law.” See Joint Status Report and Discovery Plan (Dkt. No. 20 124) at 5. Since the filing of the Joint Status Report, the parties have revised their proposed 21 procedural treatment of the Motion to Dismiss Counterclaims and reached agreement as follows: 22 (1) the Soundgarden Parties will file new Second Amended Counterclaims which amends the 23 operative counterclaims (including adding the Surviving Band Members and other Soundgarden- 24 related entities as Counter-Plaintiffs); and (2) Plaintiffs will then file a new Motion to Dismiss within 25 two weeks of the filing of these now operative Second Amended Counterclaims to be briefed under 26 Washington law. 27 Second, this filing is made to harmonize the operative counterclaims in this action based on 28 substantial changes made by Plaintiffs to the allegations of their original complaint (Dkt. No. 1) THE SOUNDGARDEN DEFENDANTS’ ANSWER AND AFFIRMATIVE DEFENSES, AND THE SOUNDGARDEN PARTIES’ SECOND AMENDED COUNTERCLAIMS (No. 2:20−cv−01218− RSL-MLP)–3 Case 2:20-cv-01218-RSL-MLP Document 166 Filed 04/16/21 Page 4 of 66 1 now set forth in their amended complaints filed in this action after the Counterclaims and the FACC 2 were filed, and after the action was transferred from Florida to Washington in mid-August 2020. In 3 their original Complaint, Plaintiffs broadly alleged complete ownership over seven multitrack audio 4 files intended as songs to be included on a new Soundgarden album—which are in Vicky Cornell’s 5 custody because they were stored on Cornell’s laptop(s) returned to her by Soundgarden after 6 Cornell’s death in May 2017. See Complaint (Dkt. No. 1) ¶¶ 42, 69-80.1 Plaintiffs radically revise 7 their claims in their First Amended Complaint (“FAC”) filed on November 4, 2020 (Dkt. No. 123) 8 and the SAC (Dkt. No. 139) filed on December 18, 2020. Specifically, in the FAC and SAC, 9 Plaintiffs narrow their claim from complete ownership over the album audio files to ownership of 10 Cornell’s vocal recordings. See FAC (Dkt. No. 123) ¶ 3, 77-93; SAC (Dkt. No. 139) ¶ 3, 77-93 11 (limiting claimed copyright ownership to “Chris’ Vocal Recordings”). 12 Third, this filing is made to reflect the impact on this action of the ongoing buyout process 13 between the Soundgarden Parties and Plaintiffs and particularly the new buyout action filed by 14 Plaintiffs in this Court. On February 16, 2021, Plaintiffs filed a related action with a single cause of 15 action for buyout valuation pursuant to RCW 25.05.250(9) against all the Soundgarden Parties. See 16 Vicky Cornell v. Soundgarden et al, Case # 2:21−cv−00192−RSL-MLP (“Buyout Action”), 17 Complaint (Dkt. No. 1). The Buyout Action demands that this Court value Plaintiffs’ inherited 18 “dissociated” interests in Soundgarden and the Soundgarden-related entities for purposes of 19 finalization of the buyout process. Plaintiffs assert and concede in the Buyout Action that the scope 20 of the buyout of these interests includes assets at issue in this action, which is consistent with the 21 positions set forth in the formal buyout package, including expert reports, delivered by the 22 Soundgarden Parties to Plaintiffs on October 20, 2020. Accordingly, the Second Amended 23 Counterclaims adds an additional cause of action (First Cause of Action) for “Declaratory Relief – 24 25 1 The Florida court summarized the allegations of Plaintiffs’ original, then-operative, complaint as follows: “Soundgarden is a Grammy-winning Seattle rock band. Between 2016 and 2017, 26 Soundgarden recorded, but never released, an album that is now at the center of this litigation. Plaintiff claims that she is the exclusive owner of that album, which she alleges Cornell solely 27 authored from his Florida home. Plaintiff seeks a declaratory judgement to establish her ownership 28 of the album’s copyright . .” See Order Granting Defendants’ Motion to Dismiss (Dkt. No. 95) at 1-2. THE SOUNDGARDEN DEFENDANTS’ ANSWER AND AFFIRMATIVE DEFENSES, AND THE SOUNDGARDEN PARTIES’ SECOND AMENDED COUNTERCLAIMS (No. 2:20−cv−01218− RSL-MLP)–4 Case 2:20-cv-01218-RSL-MLP Document 166 Filed 04/16/21 Page 5 of 66 1 Buyout” for a judicial declaration that the finalization of the buyout process will resolve some or all 2 of the issues and claims in this action, including causes of action.