Antitrust Law Daily Wrap Up, ADVERTISING—D. Or.: Class action against Sirius XM to proceed over alleged hidden 'Music Royalty Fee', (Oct 15, 2025)

By Martin A. Steinberg, J.D.

Sirius XM allegedly misled consumers by advertising artificially low subscription prices while concealing a 21.4% “U.S. Music Royalty Fee” under vague “fees and taxes” language.

The federal court in Portland, Oregon, denied Sirius XM Radio LLC’s motion to dismiss a putative class action brought by Oregon subscribers alleging deceptive pricing practices under the Oregon Unlawful Trade Practices Act (UTPA) and breach of the implied covenant of good faith and fair dealing. The plaintiffs claimed Sirius XM falsely advertised its music subscription plans by not disclosing a 21.4% “U.S. Music Royalty Fee,” misleading consumers into thinking the additional charge was solely “fees and taxes.” The court rejected Sirius XM’s arguments that the claims were time-barred, that disclosure of the “all-in” price cured any deception, and that injunctive relief was moot due to voluntary policy changes. The court held that factual disputes over when the plaintiffs reasonably should have discovered the alleged misrepresentation and whether the omission of the Royalty Fee violated the UTPA precluded dismissal. He further found that the good-faith claim was viable because Sirius XM’s discretionary fee practices could have exceeded consumers’ reasonable expectations, emphasizing that Oregon’s UTPA protects even “gullible” consumers from misleading conduct (Kirkpatrick v. Sirius XM Radio LLC, No. 3:24-cv-00955-SI (D. Or. Oct. 14, 2025)).

Background. The four named plaintiffs, Kara Kirkpatrick, Gillian Maxfield, Anna DeMarco, and Cody Michael, are Oregon residents who subscribed to Sirius XM’s music services and allege they were misled about the actual cost of their plans. Sirius XM, a Delaware LLC headquartered in New York, provides satellite and internet-streaming radio service to roughly 33.9 million customers nationwide, including about 431,000 in Oregon.

Beginning in 2009, Sirius XM began adding a “U.S. Music Royalty Fee” (initially 13.9%, later 21.4%) on top of its advertised base rates, collecting over $1.36 billion in 2023, more than it actually paid in music royalties. The company’s ads and promotional materials quoted only the base price, omitting mention of the Royalty Fee and referring vaguely to “fees and taxes.” Customers were not informed of the fee until the final step of the online checkout, if at all, and telephone agents also failed to disclose it. Because Sirius XM automatically renewed subscriptions and provided no itemized invoices, customers only saw total charges on credit-card statements. When subscribers inquired, representatives allegedly mischaracterized the Royalty Fee as “government-mandated.”

Each named plaintiff recounted similar experiences: being quoted a price excluding the fee, unknowingly being charged the extra percentage, and discovering the existence of the Royalty Fee only after seeing online “legal investigation” notices. The plaintiffs filed suit on behalf of all similarly situated Oregon consumers, seeking injunctive relief enjoining Sirius XM from false or misleading advertisement or representation with respect to the Royalty Fee. They also seek equitable relief, including statutory and punitive damages, as well as attorney’s fees, costs, and interest. Defendant moved to dismiss with prejudice Plaintiffs’ complaint in its entirety.

Violation of UTPA. The court denied Sirius XM’s motion to dismiss the UTPA claim in full by concluding that the plaintiffs plausibly alleged deceptive or misleading conduct by advertising base prices without including the 21.4% Royalty Fee, and that factual issues concerning notice, consumer perception, and the adequacy of disclosures precluded resolution as a matter of law. The opinion emphasized Oregon’s consumer-protection policy of construing the UTPA broadly to deter unfair or deceptive trade practices and to safeguard even unsophisticated consumers from hidden or misleading charges.

Plaintiffs alleged that Sirius XM willfully violated ORS § 646.608(1)(e), (i), and (s) by falsely representing the characteristics and price of its music plans and by advertising those plans with no intent to sell them as advertised. Sirius XM moved to dismiss, arguing that the claims were time-barred under the one-year limitation period in ORS § 646.638(6) and, alternatively, that its disclosures were sufficient to preclude liability.

Timeliness. Under Oregon’s discovery rule, a claim accrues when a plaintiff knows or reasonably should know of (1) harm, (2) causation, and (3) tortious conduct. Sirius XM contended that subscribers had constructive notice because their credit-card statements reflected the full amounts charged, including the “Royalty Fee,” and that their online accounts showed the exact totals more than a year before suit was filed. The court rejected dismissal on this ground, finding that when a plaintiff discovers or should have discovered the deceptive conduct, it is ordinarily a fact question for the jury. The court noted that while the fee might appear as a slightly higher charge, a reasonable juror could find that plaintiffs, who received no invoices, no notice of the fee, and only vague “fees and taxes” language, would not necessarily have recognized the discrepancy or had reason to investigate. For the three plaintiffs who subscribed via telephone (Kirkpatrick, Maxfield, and DeMarco), Sirius XM’s argument failed because its agents never disclosed the fee, the company sent no billing breakdowns, and the plaintiffs alleged they had no way of detecting the surcharge.

Regarding plaintiff Cody Michael, who subscribed online, the court acknowledged that the checkout page referenced “fees and taxes” and included a fine-print link to “details” and the “Customer Agreement.” While Sirius XM argued this triggered a duty to inquire, the court found unresolved factual questions: the screenshot showing the link was small, inconspicuous, and embedded in unrelated text; moreover, the complaint did not establish what information the “details” link actually revealed. Even if the plaintiff had called for clarification, the plaintiff alleged that Sirius XM’s agents routinely gave false or incomplete explanations, supporting an inference that reasonable diligence would not have uncovered the deception. Because a jury could conclude that none of the plaintiffs had sufficient notice before June 2024, the court held the UTPA claims timely.

Merits. On the merits, Sirius XM contended that the UTPA should be judged under a “reasonable consumer” standard, arguing that it satisfied any duty to disclose by showing customers the “all-in” price before purchase. Sirius XM urged the court to apply California’s “reasonable consumer” test; however, the court declined to do so, noting that Oregon’s Supreme Court has never formally adopted that standard and that the plaintiffs instead urged application of the “least sophisticated consumer” standard articulated in Clark v. Eddie Bauer LLC, 371 Or. 177, 186 (2023), which emphasizes consumer protection for even gullible buyers. The court found the governing standard under Oregon law unresolved but unnecessary to decide at the pleading stage because the complaint stated a claim under either test.

Sirius XM further argued that its disclosure of an “all-in” price insulated it from liability. The court rejected this argument as inconsistent with Oregon law. He cited the Oregon Supreme Court’s 2023 decision in State ex rel. Rosenblum v. Living Essentials, LLC, 371 Or. 23, 38 (2023), which held that UTPA liability does not depend on whether a misrepresentation is material to purchasing decisions and that the statute broadly prohibits conduct that is misleading or confusing to consumers. The court held that Sirius XM could be liable even if consumers saw the total price, because the company’s practice of omitting and misdescribing the “Royalty Fee” could still constitute a deceptive representation under subsections (e), (i), and (s).

Finally, Sirius XM claimed that all customers ultimately received disclosure of the total subscription price through the post-purchase “Customer Agreement.” The court found that argument unpersuasive because the plaintiffs who subscribed by phone received the agreement only after entering binding payment information. At the motion-to-dismiss stage, their allegation that the quoted price excluded the fee must be accepted as true. Determining whether Sirius XM adequately disclosed the fee or misled consumers, therefore, presented a factual dispute inappropriate for dismissal.

Breach of the implied covenant of good faith and fair dealing. Accepting plaintiffs’ allegations as true for pleading purposes, the court concluded that if the operative contracts were oral, Sirius XM lacked any contractual basis for the fee at all. Accordingly, the court denied Sirius XM’s motion to dismiss the claim for breach of the implied covenant of good faith and fair dealing. The court addressed the plaintiffs’ alternative claim that Sirius XM breached the implied covenant of good faith and fair dealing inherent in its subscription contracts. The plaintiffs argued that even if Sirius XM possessed contractual discretion to impose the Music Royalty Fee, it exercised that discretion in bad faith and contrary to subscribers’ reasonable expectations by obscuring the fee’s nature and amount. The court reiterated that Oregon law imposes a duty of good faith in every contract. Sirius XM contended that it had an express contractual right to levy the Royalty Fee and thus could not have breached the covenant. The court found that argument unavailing because Oregon precedent holds that contractual discretion must be exercised “within the confines of the reasonable expectations” of the parties.

The plaintiffs plausibly alleged that Sirius XM’s manner of disclosing, or failing to disclose, the Royalty Fee fell outside consumers’ reasonable expectations. The court also observed that, at this early stage, it was unclear what contract governed. Plaintiffs who subscribed by phone claimed their agreements were oral and did not include the Royalty Fee, while Sirius XM maintained the written Customer Agreement controlled.

Mootness. In the final section of the opinion, the court addressed Sirius XM’s contention that the plaintiffs’ request for injunctive relief was moot because the company had voluntarily revised its advertising practices. Sirius XM argued that, since it had begun using “all-in” pricing disclosures in 2024 to comply with a new California transparency law, explicitly showing the total cost including the “U.S. Music Royalty Fee,” there was no longer any live controversy for the court to resolve. The court rejected that argument, emphasizing that voluntary cessation of allegedly unlawful conduct does not automatically deprive a federal court of jurisdiction.

Citing Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167 (2000), the court explained that a defendant claiming mootness through voluntary compliance bears a “formidable burden” of proving that it is absolutely clear the wrongful behavior could not reasonably be expected to recur. He also cited Rosebrock v. Mathis, 745 F.3d 963 (9th Cir. 2014), which stated that courts “are less inclined to find mootness where the new policy could be easily abandoned or altered in the future.” Sirius XM, the court observed, had merely chosen to change its disclosures in light of an external state law, and it had not entered into a binding injunction, consent decree, or permanent reform ensuring continued compliance. Nothing prevented the company from reverting to its prior advertising practices once litigation pressure subsided or in markets outside California, including Oregon, where this suit was brought.

The court further noted that Sirius XM’s argument misconstrued the breadth of the plaintiffs’ allegations: the complaint challenged not only advertising omissions but also broader misrepresentations regarding the characterization of the Royalty Fee as “government-mandated” and the lack of transparency in billing. Because Sirius XM failed to meet its heavy burden under the voluntary-cessation doctrine, the court held that the controversy remained live. Accordingly, the court denied Sirius XM’s motion to dismiss on mootness grounds, allowing the plaintiffs’ request for injunctive and equitable relief, together with their statutory and punitive-damages claims, to proceed.

The Case is No. 3:24-cv-00955-SI.

Judge: Simon, M.

Attorneys: Che Corrington (Hattis Lukacs & Corrington) for Kara Kirkpatrick. Tim D. Wackerbarth (Ballard Spahr LLP) for Sirius XM Radio LLC.

Companies: Sirius XM Radio LLC

Cases: Advertising StateUnfairTradePractices OregonNews