According to court documents found by Digital Music News, the potential $17.1bn liability extends to to individuals working for Grooveshark.
UMG accuses the defendants of uploading 113,777 songs - and is reportedly looking to reclaim $150,000 (?96,000) per track.
However, Grooveshark's General Counsel Marshall Custer has told of the company's confidence that it will win its legal battle.
"We have reviewed the Complaint that Universal Music Group filed last Friday against Grooveshark in U.S. District Court in Manhattan," said Custer. "Universal's claims rest almost entirely on an anonymous, blatantly false internet blog comment and Universal's gross mischaracterization of information that Grooveshark itself provided to Universal."
"While Universal has deliberately engaged the media prior to serving a copy of the Complaint on Grooveshark, Grooveshark intends to fight this battle before the Court, not in the press. Grooveshark welcomes the opportunity to present the facts to the Court and has full confidence that it will prevail in the litigation."
A date is yet to be set for the hearing.