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F.B.T. settles with UMG, Aftermath

'Eminem case' cited as precedent for other digital royalty suits

In a resolution that could have an impact on several pending lawsuits involving royalties for downloads and ringtones, F.B.T. Productions filed a stipulation to dismiss its case against Universal Music Group and Aftermath Records on Monday following a settlement agreement.

The so-called “Eminem case” has been cited as precedent in a number of actions filed against the majors that alleged steep underpayment of digital royalties.

Richard Busch, the Nashville-based attorney for plaintiff F.B.T., told Daily Variety, “The action has been settled to the satisfaction of all parties.” He declined to offer any information regarding the size of the settlement or further comment.

A UMG spokesman could not be reached immediately for comment.

In September 2010, the Ninth Circuit Court of Appeals overturned a 2009 jury verdict favoring UMG in F.B.T.’s suit, filed against Aftermath and UMG in 2007 (Daily Variety, Sept. 7, 2010). The action, involving 1998 and 2003 contracts, was lodged by F.B.T. and Em2M, companies that handled rapper Eminem’s production and music publishing interests early in his career.

The appellate panel ruled that language in a disputed contract entitling the plaintiffs to a higher royalty on digital sales was “unambiguous,” and remanded the case to U.S. District Court. A damages phase of the case had been pending in Northern California federal court.

The F.B.T. case had been closely watched, for several class actions and individual suits had been launched in the wake of the appellate decision by artists – – most of them heritage acts with contracts dating in many cases back to the ’70s — who claimed they were also entitled to higher digital royalties. In nearly all cases, the actions cited the appellate decision as a precedent.

In those suits, virtually all the plaintiffs have claimed that they are entitled to a royalty rate of 50% of net receipts, granted for masters licensed to third parties. As in the F.B.T. case, the plaintiffs have claimed that they were paid at a far lower royalty rate, usually 12%-20%, for records sold.

An amended consolidated complaint in the major class action, filed earlier this month, alleged that the plaintiff class has been underpaid by UMG to the tune of “hundreds of millions of dollars” on digital downloads and “tens of millions” on ringtones (Daily Variety, Oct. 12).

Acts that have filed digital royalties suits include James Taylor, Peter Frampton, Boz Scaggs, Toto, “Weird Al” Yankovic, Chuck D of Public Enemy and the estate of Rick James. All the major label groups – – including EMI’s Capitol Records, now part of UMG — have been sued.

Attorney Busch, who represents a number of performers who have filed individual actions against the majors, had no comment about how Monday’s settlement might affect other pending cases.

David Given, one of several attorneys repping plaintiffs in the major class action against UMG, told Daily Variety, “The conclusion of this case must come as a great relief to UMG, as it was losing every round of this dispute. F.B.T. fought tenaciously, and was ultimately proved to be in the right on the central question in the case. The result is likely to have long-lasting and serious repercussions to the music business, and to inure to many other artists’ and producers’ benefit.”

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