closing-letter-to-client.docx

1035-00003 · Flor de Luna Publishing, LLC · Closing

closing-letter-to-client.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP Attorneys at Law 777 South Figueroa Street, 34th Floor Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201 www.calderwoodharkness.com

August 14, 2023

VIA EMAIL AND U.S. MAIL

Ms. Marguerite D. Fonseca 4827 Laurelgrove Avenue Studio City, CA 91604

Re: Closing of Matter — Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA (C.D. Cal.) Our Matter No.: 1035-00003

Dear Ms. Fonseca:

We are pleased to confirm that the copyright infringement matter captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA, pending in the United States District Court for the Central District of California, has been fully resolved. The Settlement Agreement and Mutual Release (the "Settlement Agreement") between you (individually and as the sole managing member of Flor de Luna Publishing, LLC and Mariposa Sound Recordings, LLC) and Crescendo Digital Media, Inc. ("Crescendo") was fully executed today, August 14, 2023. Simultaneously with the execution of the Settlement Agreement, our office filed a Stipulation of Dismissal with Prejudice with the Court in accordance with Federal Rule of Civil Procedure 41(a)(1)(A)(ii). With these actions, the active litigation phase of this engagement has concluded.

On behalf of the entire team at Calderwood & Harkness LLP, please accept our sincere congratulations on this successful outcome. Since we opened this matter on February 20, 2023 — a period of approximately six months — we have worked closely with you and your catalog administrator, Thornfield Music Administration, Inc., to build a compelling case, establish the scope of the infringement, and negotiate settlement terms that we believe are highly favorable to you and your publishing and recording entities. The resolution achieved here reflects both the strength of your copyright claims and your willingness to pursue them vigorously. We are proud to have served as your counsel in this matter.

The purpose of this letter is to summarize the settlement terms, outline important upcoming deadlines and monitoring obligations, address our fee arrangements, and provide guidance on file retention and matter closing procedures. We encourage you to retain this letter for your records and to contact us with any questions.

1. Settlement Summary

As noted above, the Settlement Agreement and Mutual Release was fully executed on August 14, 2023, by all parties. The Stipulation of Dismissal with Prejudice was filed with the Court simultaneously, with the Honorable R. Gary Klausner presiding. Consistent with the terms of the Settlement Agreement, and in accordance with the framework set forth in Kokkonen v. Ridgeline Mutual Insurance, 511 U.S. 375 (1994), the Stipulation provides that the Court retains jurisdiction to enforce the terms of the Settlement Agreement. This retained jurisdiction is important because it means that, in the event Crescendo defaults on any of its settlement obligations, you may seek enforcement through the Court without having to initiate a new action.

The material terms of the Settlement Agreement are summarized in the table below:

We wish to draw your attention to several aspects of this settlement that we believe are noteworthy. First, the total cash settlement of $1,620,000.00 exceeds the calculated back-royalties of $1,087,200.00 (based on the forensic streaming analysis conducted by our retained expert, Dr. Elaine Tanaka of Tanaka Analytics Group). The differential reflects a statutory enhancement component that compensates you for the willful nature of Crescendo's infringement, in addition to the separate attorney's fees reimbursement of $195,000.00. Second, for context, our pre-settlement demand was $2,312,200.00. While the final settlement figure is below that initial demand, it represents a strong result in light of the litigation posture at the time of settlement — particularly given the uncertainties inherent in proceeding to a damages trial and the inherent risks associated with the Court's pending Daubert motion regarding portions of Dr. Tanaka's methodology. In our professional judgment, this settlement secures a substantial and certain recovery while preserving your ongoing revenue stream through the Prospective License.

2. Prospective License Monitoring

Although the litigation has concluded, the Prospective License component of the Settlement Agreement creates an ongoing commercial relationship between your entities and Crescendo that will require diligent monitoring over the three-year license term (August 14, 2023 through August 14, 2026).

We strongly recommend that you instruct Thornfield Music Administration, Inc. — through its President, Raymond O. Sato — to assume primary responsibility for monitoring Crescendo's quarterly royalty statements and streaming data under the Prospective License. Thornfield, as your designated catalog administrator, is well-positioned to verify the accuracy of Crescendo's streaming reports against independent data sources such as Luminate (formerly Nielsen SoundScan/MRC Data) and the platform-level analytics available through your distributor agreements.

Under the terms of the Settlement Agreement, Crescendo is required to provide written royalty statements to you (or your designee) within thirty (30) days after the end of each calendar quarter, accompanied by corresponding royalty payments. The royalty rate is $0.035 per stream across all of the works identified in Exhibit A to the Settlement Agreement. In addition, Crescendo has committed to a minimum annual guarantee of $175,000.00 per License Year — meaning that regardless of streaming volume, Crescendo must pay at least $175,000.00 annually, allocated equally between Flor de Luna Publishing, LLC ($87,500.00 per year) and Mariposa Sound Recordings, LLC ($87,500.00 per year). If actual per-stream royalties exceed the MAG in any given License Year, the excess is payable in addition to the MAG.

The Settlement Agreement further grants you — through Thornfield or another designated auditor of your choosing — the right to audit Crescendo's streaming records once per calendar year. This audit right is an important safeguard. If an audit reveals discrepancies exceeding five percent (5%) of the royalties reported by Crescendo for the audited period, Crescendo is obligated to bear the reasonable cost of the audit and to pay the underpayment amount together with interest at a rate of one and one-half percent (1.5%) per month from the date the underpayment should have been made.

Our Firm is pleased to offer to coordinate with Mr. Sato at Thornfield regarding the first quarterly royalty report and to ensure that appropriate monitoring protocols are established. The first quarterly royalty report covers the stub period from August 14, 2023 (the effective date of the Settlement Agreement) through September 30, 2023, and is due from Crescendo no later than October 30, 2023. We encourage you to confirm with Mr. Sato that Thornfield is prepared to receive and review this report promptly upon receipt.

3. Payment Monitoring

Calderwood & Harkness LLP will continue to monitor receipt of both settlement installment payments on your behalf. The payment schedule is as follows:

• First Installment: $1,100,000.00, due by September 13, 2023 (thirty (30) calendar days following execution of the Settlement Agreement).

• Second Installment: $520,000.00, due by November 12, 2023 (ninety (90) calendar days following execution of the Settlement Agreement).

• Total Settlement Amount: $1,100,000.00 + $520,000.00 = $1,620,000.00.

All settlement payments are to be made by wire transfer to accounts designated by your entities and by Calderwood & Harkness LLP, as set forth in the wire instructions delivered to Crescendo's counsel (Phelps, Dugan & Somersby LLP, Attn: Catherine Trieu) contemporaneously with the execution of the Settlement Agreement.

Upon receipt of each wire transfer, the Firm will promptly confirm receipt with you and disburse the portions allocable to Flor de Luna Publishing, LLC and Mariposa Sound Recordings, LLC from the Firm's client trust account (IOLTA) in accordance with the allocation set forth in the Settlement Agreement. Specifically, from the first installment, after deducting the attorney's fees reimbursement component and applicable trust account allocations, the back-royalty proceeds will be disbursed to the respective bank accounts you have designated for Flor de Luna Publishing, LLC and Mariposa Sound Recordings, LLC.

The $195,000.00 attorney's fee reimbursement payable by Crescendo will be applied to your outstanding invoice balance with the Firm upon receipt. We address the overall fee summary in Section 5 below.

In the event that Crescendo fails to make any installment payment when due, the Settlement Agreement provides that late payments accrue interest at a rate of one and one-half percent (1.5%) per month, which equates to eighteen percent (18%) per annum. This default interest provision serves as an additional incentive for Crescendo to make timely payments.

4. Important Deadlines

We have prepared the following summary of upcoming deadlines that you should note and calendar. We recommend that you share this schedule with Mr. Sato at Thornfield Music Administration, Inc. as well.

We wish to emphasize the importance of the enforcement mechanism built into the Settlement Agreement. If Crescendo fails to make any payment — whether a settlement installment or a quarterly royalty payment — within ten (10) business days of its due date, the Prospective License terminates automatically, without the need for any further action on your part. Upon such termination, Crescendo is obligated to remove all of your works from the Crescendo Stream platform and from all sublicensed content packages within forty-eight (48) hours. This provision was a critical term that we negotiated on your behalf, and it provides you with significant leverage in the event of any payment default.

Should any payment default occur, we urge you to contact our office immediately so that the Firm can take prompt action to enforce the Settlement Agreement. As noted above, the Court has retained jurisdiction for enforcement purposes under the terms of the Stipulation of Dismissal, which means that we can file an enforcement motion directly with Judge Klausner rather than initiating a new lawsuit. This is a meaningful procedural advantage that preserves your ability to seek expedited relief if necessary.

5. Fee Summary

We wish to provide you with a summary of the fee arrangements for this engagement. As you will recall, our fee arrangement was structured as a hybrid: reduced hourly rates combined with a contingency component tied to the gross settlement recovery. The key parameters of this arrangement, as set forth in our engagement letter dated February 20, 2023, were as follows:

• Partner hourly rate: $725.00 per hour (reduced from the Firm's standard rate of $950.00 per hour)

• Associate hourly rate: $475.00 per hour (reduced from the Firm's standard rate of $625.00 per hour)

• Contingency component: 10% of gross settlement recovery

The contingency component, calculated on the gross cash settlement of $1,620,000.00, is $162,000.00 (10% × $1,620,000.00 = $162,000.00). Combined with the hourly billings incurred over the course of the six-month engagement, the total fees for the matter are approximately $285,000.00.

The following table summarizes the fee calculation and the credits applicable to your account:

A final invoice detailing all time entries, costs advanced by the Firm (including filing fees, service of process costs, expert witness fees, and deposition transcript costs), and the contingency component will follow under separate cover within the next two weeks. The $195,000.00 attorney's fee reimbursement from Crescendo will be credited against your fee obligation upon receipt by the Firm. We anticipate that, following receipt of the first installment from Crescendo and application of the attorney's fee reimbursement and your initial retainer, the estimated remaining balance due to the Firm will be approximately $65,000.00. We will provide a precise accounting with the final invoice.

We are grateful for your confidence in our Firm and your understanding of the fee structure throughout this engagement. We believe the hybrid arrangement served your interests well, as it reduced your upfront exposure while aligning the Firm's incentives with the successful outcome of the case.

6. File Retention

In accordance with Calderwood & Harkness LLP's document retention policy, the Firm will retain the physical and electronic files for this matter for a period of seven (7) years from the date of closing — that is, through approximately August 2030. This retention period encompasses all pleadings, correspondence, discovery materials, expert reports, settlement documents, and other case-related files.

Should you wish to obtain copies of any documents from the file at any time during the retention period, please do not hesitate to contact our office, and we will arrange to provide them to you promptly. We note that you have previously been provided with executed copies of all principal documents, including the Settlement Agreement and Mutual Release, the Stipulation of Dismissal with Prejudice, and the Prospective License terms (which are incorporated as Exhibit B to the Settlement Agreement).

All privileged and confidential work product generated during the course of this engagement — including internal legal memoranda, attorney-client communications, litigation strategy documents, and draft materials — will be maintained in accordance with applicable professional responsibility obligations under the California Rules of Professional Conduct and the American Bar Association Model Rules of Professional Conduct. The attorney-client privilege and work product protections that attach to these materials survive the closing of this matter.

7. Matter Closing

With the execution of the Settlement Agreement and Mutual Release and the filing of the Stipulation of Dismissal with Prejudice, the matter captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA, is now formally closed in our records. The matter will be carried under Matter No. 1035-00003, Billing Matter Code 04417.001, for all archival and accounting purposes. The Firm will, of course, continue to monitor the two settlement installment payments and coordinate with Thornfield regarding the initial quarterly royalty report, as described in Sections 2, 3, and 4 above, but no further substantive legal work is anticipated unless a default or other issue arises requiring the Firm's involvement.

It has been a genuine privilege to represent you in this matter, Ms. Fonseca. Your creative works are of extraordinary value, and we are gratified that this engagement has resulted in both meaningful compensation for past infringement and a forward-looking licensing framework that protects your interests going forward.

Should you require legal assistance in the future — whether in connection with intellectual property matters, entertainment industry transactions, or any other area — please do not hesitate to contact me or any member of the engagement team. We would welcome the opportunity to serve you again.

On behalf of Marcus Delgado, Christy Bauer, Peter Vassiliev, and the entire Calderwood & Harkness team, congratulations once more on this excellent result.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Alan Ngo Partner Direct: (213) 555-7218

Email: anglo@calderwoodharkness.com

cc (via email):

Marcus Delgado, Partner, Calderwood & Harkness LLP Christy Bauer, Associate, Calderwood & Harkness LLP Peter Vassiliev, Associate, Calderwood & Harkness LLP Raymond O. Sato, President, Thornfield Music Administration, Inc. (with client consent)

Term	Detail
Total cash settlement	$1,620,000.00
Back-royalties to Flor de Luna Publishing, LLC	$712,500.00
Back-royalties to Mariposa Sound Recordings, LLC	$712,500.00
Attorney's fees reimbursement to Calderwood & Harkness LLP	$195,000.00
First installment ($1,100,000.00)	Due September 13, 2023 (30 calendar days post-execution)
Second installment ($520,000.00)	Due November 12, 2023 (90 calendar days post-execution)
Prospective license term	3 years (August 14, 2023 through August 14, 2026)
Per-stream royalty rate	$0.035 per stream
Minimum annual guarantee ("MAG")	$175,000.00 per License Year ($525,000.00 total over 3-year term)
MAG allocation	$87,500.00/year to Flor de Luna Publishing, LLC; $87,500.00/year to Mariposa Sound Recordings, LLC
Quarterly reporting and payment	Due within 30 days of the end of each calendar quarter
Audit rights	Once per calendar year; Crescendo bears the reasonable cost of the audit if the discrepancy exceeds 5% of reported royalties
Takedown/termination trigger	Automatic license termination if Crescendo fails to pay within 10 business days of any due date; 48-hour takedown obligation
Mutual release	All claims arising from the identified works for the period January 1, 2019 through August 14, 2023
Confidentiality	Mutual; carve-outs for tax reporting, legal obligations, and catalog administrators (including Thornfield Music Administration, Inc.)
Date	Deadline
September 13, 2023	First installment of $1,100,000.00 due from Crescendo Digital Media, Inc.
October 30, 2023	First quarterly royalty report and payment due from Crescendo (stub period: August 14, 2023 – September 30, 2023)
November 12, 2023	Second installment of $520,000.00 due from Crescendo Digital Media, Inc.
Item	Amount
Total fees (hourly billings + 10% contingency component of $162,000.00)	~$285,000.00
Less: Crescendo attorney's fee reimbursement	($195,000.00)
Less: Initial retainer (held in client trust account)	($25,000.00)
Estimated remaining balance due to the Firm	~$65,000.00

CALDERWOOD & HARKNESS LLP Attorneys at Law 777 South Figueroa Street, 34th Floor Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201 www.calderwoodharkness.com
August 14, 2023
VIA EMAIL AND U.S. MAIL
Ms. Marguerite D. Fonseca 4827 Laurelgrove Avenue Studio City, CA 91604
Re: Closing of Matter — Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA (C.D. Cal.) Our Matter No.: 1035-00003
Dear Ms. Fonseca:
We are pleased to confirm that the copyright infringement matter captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA, pending in the United States District Court for the Central District of California, has been fully resolved. The Settlement Agreement and Mutual Release (the "Settlement Agreement") between you (individually and as the sole managing member of Flor de Luna Publishing, LLC and Mariposa Sound Recordings, LLC) and Crescendo Digital Media, Inc. ("Crescendo") was fully executed today, August 14, 2023. Simultaneously with the execution of the Settlement Agreement, our office filed a Stipulation of Dismissal with Prejudice with the Court in accordance with Federal Rule of Civil Procedure 41(a)(1)(A)(ii). With these actions, the active litigation phase of this engagement has concluded.
On behalf of the entire team at Calderwood & Harkness LLP, please accept our sincere congratulations on this successful outcome. Since we opened this matter on February 20, 2023 — a period of approximately six months — we have worked closely with you and your catalog administrator, Thornfield Music Administration, Inc., to build a compelling case, establish the scope of the infringement, and negotiate settlement terms that we believe are highly favorable to you and your publishing and recording entities. The resolution achieved here reflects both the strength of your copyright claims and your willingness to pursue them vigorously. We are proud to have served as your counsel in this matter.
The purpose of this letter is to summarize the settlement terms, outline important upcoming deadlines and monitoring obligations, address our fee arrangements, and provide guidance on file retention and matter closing procedures. We encourage you to retain this letter for your records and to contact us with any questions.
1. Settlement Summary
As noted above, the Settlement Agreement and Mutual Release was fully executed on August 14, 2023, by all parties. The Stipulation of Dismissal with Prejudice was filed with the Court simultaneously, with the Honorable R. Gary Klausner presiding. Consistent with the terms of the Settlement Agreement, and in accordance with the framework set forth in Kokkonen v. Ridgeline Mutual Insurance, 511 U.S. 375 (1994), the Stipulation provides that the Court retains jurisdiction to enforce the terms of the Settlement Agreement. This retained jurisdiction is important because it means that, in the event Crescendo defaults on any of its settlement obligations, you may seek enforcement through the Court without having to initiate a new action.
The material terms of the Settlement Agreement are summarized in the table below:
We wish to draw your attention to several aspects of this settlement that we believe are noteworthy. First, the total cash settlement of $1,620,000.00 exceeds the calculated back-royalties of $1,087,200.00 (based on the forensic streaming analysis conducted by our retained expert, Dr. Elaine Tanaka of Tanaka Analytics Group). The differential reflects a statutory enhancement component that compensates you for the willful nature of Crescendo's infringement, in addition to the separate attorney's fees reimbursement of $195,000.00. Second, for context, our pre-settlement demand was $2,312,200.00. While the final settlement figure is below that initial demand, it represents a strong result in light of the litigation posture at the time of settlement — particularly given the uncertainties inherent in proceeding to a damages trial and the inherent risks associated with the Court's pending Daubert motion regarding portions of Dr. Tanaka's methodology. In our professional judgment, this settlement secures a substantial and certain recovery while preserving your ongoing revenue stream through the Prospective License.
2. Prospective License Monitoring
Although the litigation has concluded, the Prospective License component of the Settlement Agreement creates an ongoing commercial relationship between your entities and Crescendo that will require diligent monitoring over the three-year license term (August 14, 2023 through August 14, 2026).
We strongly recommend that you instruct Thornfield Music Administration, Inc. — through its President, Raymond O. Sato — to assume primary responsibility for monitoring Crescendo's quarterly royalty statements and streaming data under the Prospective License. Thornfield, as your designated catalog administrator, is well-positioned to verify the accuracy of Crescendo's streaming reports against independent data sources such as Luminate (formerly Nielsen SoundScan/MRC Data) and the platform-level analytics available through your distributor agreements.
Under the terms of the Settlement Agreement, Crescendo is required to provide written royalty statements to you (or your designee) within thirty (30) days after the end of each calendar quarter, accompanied by corresponding royalty payments. The royalty rate is $0.035 per stream across all of the works identified in Exhibit A to the Settlement Agreement. In addition, Crescendo has committed to a minimum annual guarantee of $175,000.00 per License Year — meaning that regardless of streaming volume, Crescendo must pay at least $175,000.00 annually, allocated equally between Flor de Luna Publishing, LLC ($87,500.00 per year) and Mariposa Sound Recordings, LLC ($87,500.00 per year). If actual per-stream royalties exceed the MAG in any given License Year, the excess is payable in addition to the MAG.
The Settlement Agreement further grants you — through Thornfield or another designated auditor of your choosing — the right to audit Crescendo's streaming records once per calendar year. This audit right is an important safeguard. If an audit reveals discrepancies exceeding five percent (5%) of the royalties reported by Crescendo for the audited period, Crescendo is obligated to bear the reasonable cost of the audit and to pay the underpayment amount together with interest at a rate of one and one-half percent (1.5%) per month from the date the underpayment should have been made.
Our Firm is pleased to offer to coordinate with Mr. Sato at Thornfield regarding the first quarterly royalty report and to ensure that appropriate monitoring protocols are established. The first quarterly royalty report covers the stub period from August 14, 2023 (the effective date of the Settlement Agreement) through September 30, 2023, and is due from Crescendo no later than October 30, 2023. We encourage you to confirm with Mr. Sato that Thornfield is prepared to receive and review this report promptly upon receipt.
3. Payment Monitoring
Calderwood & Harkness LLP will continue to monitor receipt of both settlement installment payments on your behalf. The payment schedule is as follows:
• First Installment: $1,100,000.00, due by September 13, 2023 (thirty (30) calendar days following execution of the Settlement Agreement).
• Second Installment: $520,000.00, due by November 12, 2023 (ninety (90) calendar days following execution of the Settlement Agreement).
• Total Settlement Amount: $1,100,000.00 + $520,000.00 = $1,620,000.00.
All settlement payments are to be made by wire transfer to accounts designated by your entities and by Calderwood & Harkness LLP, as set forth in the wire instructions delivered to Crescendo's counsel (Phelps, Dugan & Somersby LLP, Attn: Catherine Trieu) contemporaneously with the execution of the Settlement Agreement.
Upon receipt of each wire transfer, the Firm will promptly confirm receipt with you and disburse the portions allocable to Flor de Luna Publishing, LLC and Mariposa Sound Recordings, LLC from the Firm's client trust account (IOLTA) in accordance with the allocation set forth in the Settlement Agreement. Specifically, from the first installment, after deducting the attorney's fees reimbursement component and applicable trust account allocations, the back-royalty proceeds will be disbursed to the respective bank accounts you have designated for Flor de Luna Publishing, LLC and Mariposa Sound Recordings, LLC.
The $195,000.00 attorney's fee reimbursement payable by Crescendo will be applied to your outstanding invoice balance with the Firm upon receipt. We address the overall fee summary in Section 5 below.
In the event that Crescendo fails to make any installment payment when due, the Settlement Agreement provides that late payments accrue interest at a rate of one and one-half percent (1.5%) per month, which equates to eighteen percent (18%) per annum. This default interest provision serves as an additional incentive for Crescendo to make timely payments.
4. Important Deadlines
We have prepared the following summary of upcoming deadlines that you should note and calendar. We recommend that you share this schedule with Mr. Sato at Thornfield Music Administration, Inc. as well.
We wish to emphasize the importance of the enforcement mechanism built into the Settlement Agreement. If Crescendo fails to make any payment — whether a settlement installment or a quarterly royalty payment — within ten (10) business days of its due date, the Prospective License terminates automatically, without the need for any further action on your part. Upon such termination, Crescendo is obligated to remove all of your works from the Crescendo Stream platform and from all sublicensed content packages within forty-eight (48) hours. This provision was a critical term that we negotiated on your behalf, and it provides you with significant leverage in the event of any payment default.
Should any payment default occur, we urge you to contact our office immediately so that the Firm can take prompt action to enforce the Settlement Agreement. As noted above, the Court has retained jurisdiction for enforcement purposes under the terms of the Stipulation of Dismissal, which means that we can file an enforcement motion directly with Judge Klausner rather than initiating a new lawsuit. This is a meaningful procedural advantage that preserves your ability to seek expedited relief if necessary.
5. Fee Summary
We wish to provide you with a summary of the fee arrangements for this engagement. As you will recall, our fee arrangement was structured as a hybrid: reduced hourly rates combined with a contingency component tied to the gross settlement recovery. The key parameters of this arrangement, as set forth in our engagement letter dated February 20, 2023, were as follows:
• Partner hourly rate: $725.00 per hour (reduced from the Firm's standard rate of $950.00 per hour)
• Associate hourly rate: $475.00 per hour (reduced from the Firm's standard rate of $625.00 per hour)
• Contingency component: 10% of gross settlement recovery
The contingency component, calculated on the gross cash settlement of $1,620,000.00, is $162,000.00 (10% × $1,620,000.00 = $162,000.00). Combined with the hourly billings incurred over the course of the six-month engagement, the total fees for the matter are approximately $285,000.00.
The following table summarizes the fee calculation and the credits applicable to your account:
A final invoice detailing all time entries, costs advanced by the Firm (including filing fees, service of process costs, expert witness fees, and deposition transcript costs), and the contingency component will follow under separate cover within the next two weeks. The $195,000.00 attorney's fee reimbursement from Crescendo will be credited against your fee obligation upon receipt by the Firm. We anticipate that, following receipt of the first installment from Crescendo and application of the attorney's fee reimbursement and your initial retainer, the estimated remaining balance due to the Firm will be approximately $65,000.00. We will provide a precise accounting with the final invoice.
We are grateful for your confidence in our Firm and your understanding of the fee structure throughout this engagement. We believe the hybrid arrangement served your interests well, as it reduced your upfront exposure while aligning the Firm's incentives with the successful outcome of the case.
6. File Retention
In accordance with Calderwood & Harkness LLP's document retention policy, the Firm will retain the physical and electronic files for this matter for a period of seven (7) years from the date of closing — that is, through approximately August 2030. This retention period encompasses all pleadings, correspondence, discovery materials, expert reports, settlement documents, and other case-related files.
Should you wish to obtain copies of any documents from the file at any time during the retention period, please do not hesitate to contact our office, and we will arrange to provide them to you promptly. We note that you have previously been provided with executed copies of all principal documents, including the Settlement Agreement and Mutual Release, the Stipulation of Dismissal with Prejudice, and the Prospective License terms (which are incorporated as Exhibit B to the Settlement Agreement).
All privileged and confidential work product generated during the course of this engagement — including internal legal memoranda, attorney-client communications, litigation strategy documents, and draft materials — will be maintained in accordance with applicable professional responsibility obligations under the California Rules of Professional Conduct and the American Bar Association Model Rules of Professional Conduct. The attorney-client privilege and work product protections that attach to these materials survive the closing of this matter.
7. Matter Closing
With the execution of the Settlement Agreement and Mutual Release and the filing of the Stipulation of Dismissal with Prejudice, the matter captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA, is now formally closed in our records. The matter will be carried under Matter No. 1035-00003, Billing Matter Code 04417.001, for all archival and accounting purposes. The Firm will, of course, continue to monitor the two settlement installment payments and coordinate with Thornfield regarding the initial quarterly royalty report, as described in Sections 2, 3, and 4 above, but no further substantive legal work is anticipated unless a default or other issue arises requiring the Firm's involvement.
It has been a genuine privilege to represent you in this matter, Ms. Fonseca. Your creative works are of extraordinary value, and we are gratified that this engagement has resulted in both meaningful compensation for past infringement and a forward-looking licensing framework that protects your interests going forward.
Should you require legal assistance in the future — whether in connection with intellectual property matters, entertainment industry transactions, or any other area — please do not hesitate to contact me or any member of the engagement team. We would welcome the opportunity to serve you again.
On behalf of Marcus Delgado, Christy Bauer, Peter Vassiliev, and the entire Calderwood & Harkness team, congratulations once more on this excellent result.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Alan Ngo Partner Direct: (213) 555-7218
Email: anglo@calderwoodharkness.com
cc (via email):
Marcus Delgado, Partner, Calderwood & Harkness LLP Christy Bauer, Associate, Calderwood & Harkness LLP Peter Vassiliev, Associate, Calderwood & Harkness LLP Raymond O. Sato, President, Thornfield Music Administration, Inc. (with client consent)
Term | Detail
Total cash settlement | $1,620,000.00
Back-royalties to Flor de Luna Publishing, LLC | $712,500.00
Back-royalties to Mariposa Sound Recordings, LLC | $712,500.00
Attorney's fees reimbursement to Calderwood & Harkness LLP | $195,000.00
First installment ($1,100,000.00) | Due September 13, 2023 (30 calendar days post-execution)
Second installment ($520,000.00) | Due November 12, 2023 (90 calendar days post-execution)
Prospective license term | 3 years (August 14, 2023 through August 14, 2026)
Per-stream royalty rate | $0.035 per stream
Minimum annual guarantee ("MAG") | $175,000.00 per License Year ($525,000.00 total over 3-year term)
MAG allocation | $87,500.00/year to Flor de Luna Publishing, LLC; $87,500.00/year to Mariposa Sound Recordings, LLC
Quarterly reporting and payment | Due within 30 days of the end of each calendar quarter
Audit rights | Once per calendar year; Crescendo bears the reasonable cost of the audit if the discrepancy exceeds 5% of reported royalties
Takedown/termination trigger | Automatic license termination if Crescendo fails to pay within 10 business days of any due date; 48-hour takedown obligation
Mutual release | All claims arising from the identified works for the period January 1, 2019 through August 14, 2023
Confidentiality | Mutual; carve-outs for tax reporting, legal obligations, and catalog administrators (including Thornfield Music Administration, Inc.)
Date | Deadline
September 13, 2023 | First installment of $1,100,000.00 due from Crescendo Digital Media, Inc.
October 30, 2023 | First quarterly royalty report and payment due from Crescendo (stub period: August 14, 2023 – September 30, 2023)
November 12, 2023 | Second installment of $520,000.00 due from Crescendo Digital Media, Inc.
Item | Amount
Total fees (hourly billings + 10% contingency component of $162,000.00) | ~$285,000.00
Less: Crescendo attorney's fee reimbursement | ($195,000.00)
Less: Initial retainer (held in client trust account) | ($25,000.00)
Estimated remaining balance due to the Firm | ~$65,000.00

VIA EMAIL AND U.S. MAIL

CALDERWOOD & HARKNESS LLP

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