ENTERCOM MOTION TO DISMISS PAYOLA SUIT DENIED
New York State Supreme Court judge Ira Gammerman has denied a motion filed by Entercom Communications to dismiss a suit brought against the broadcaster by Attorney General Eliot Spitzer, clearing the way for the pol’s payola case to move forward.
In a 25-page memorandum decision, Gammerman dismissed all of Entercom's arguments. The decision, which comes six months after Entercom's filing, allows Spitzer's first pay-for-play complaint brought against a radio company for fraud and deceptive business practices to proceed to the discovery phase.
Entercom has 20 days to respond to the complaint.
In its motion, Entercom cited New York law stating that compliance with federal law is a "complete defense" against state consumer-protection laws. The company claimed it complied fully with federal law in disclosing when it accepted payment for airplay and that Spitzer has no authority to enforce federal payola laws. But the judge said that doesn't prevent him from enforcing consumer protection laws to counteract deceptive business practices.
Entercom also argued that Spitzer's case was "legally flawed" because it collapsed deception and injury into one claim. But the judge noted as part of the General Business law that doesn't require him to show that consumers have been injured before seeking relief.
Spitzer alleges that Entercom's "CD Preview" is materially deceptive—even though the overnight paid spins program disclosed on-air that record companies were paying for play. But the judge drew a distinction between two types of listeners: the traditional listener or consumer (who was informed) and monitoring services which measure a song's inaudible electronic fingerprint to compile airplay charts.
Since there was no disclosure to this second type of listener, Entercom helped generate misleading chart information to the detriment of consumers.
Spitzer's March lawsuit revealed a number of Entercom e-mails which show that the company has "repeatedly engaged in a deceptive scheme" of choosing songs for airplay based on payments or non-cash consideration from labels and independent promoters without disclosure to the public and has done so with the "knowledge and encouragement" of its "corporate leadership."
Since Spitzer's payola probe began two years ago, all four major-label groups have agreed to multi-million dollar settlements and reforms that dramatically alter how they interact with radio stations.
Spitzer's office is pursuing settlements with seven radio companies, including Clear Channel, CBS Radio, Cox Radio and Emmis Communications.
