Suit alleges fraud, breach of contract

Singer-actor Rick Nelson’s estate has sued Capitol Records for millions in unpaid royalties, alleging widespread accounting sleight-of-hand.

The action, filed in California Superior Court in L.A. on Oct. 3, alleges fraud, breach of contract, and other abuses, and seeks actual and punitive damages to be determined at trial.

Nelson, who died in a 1985 plane crash, became a rock ‘n’ roll star after he was featured on “The Adventures of Ozzie and Harriet,” the popular ABC sitcom starring his parents.

He was signed to Imperial Records in 1957, and racked up 39 chart singles, including two No. 1 smashes and 15 other top-10 hits, before exiting the label for Decca Records in 1963. Imperial was later sold to Liberty Records, which subsequently became part of Capitol, flagship label of EMI Music.

EMI is presently up for sale by Citigroup, which took control of the troubled company earlier this year. Action states, “Today, Capitol is crippled and operated by a skeleton crew as it prepares itself to be sold off.”

Suit notes that in May 1992, Capitol informed its “legacy” artists of the ’50s, ’60s and ’70s that a new, higher royalty rate, of 10% of the retail list price for all full-price albums, was being instituted.

The Nelson estate audited Capitol’s catalog account this year, and alleges that the label was accounting improperly, refusing to provide crucial information regarding Nelson’s royalties and disregarding the ’92 royalty increase.

Action claims Capitol is in possession of $100 million-$250 million in “unmatched income” that can’t be linked to any particular artist, and has “stonewalled” attempts to ascertain how much the Nelson estate is due from that cache.

Echoing recent suits filed against Universal Music Group by its legacy acts regarding digital royalties, the Nelson action says that since the singer’s agreement did not anticipate digital distribution, it would be “grossly inequitable” to pay the estate based on the old rates.

An EMI spokesman did not immediately respond to a request for comment.

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