Universal Music Asks Attorneys Suing Over 2008 Fire to End ‘Fishing Expedition’

Attorneys for Universal Music Group today filed a motion to stay discovery in the ongoing lawsuit from four artists who claimed to have lost masters in a 2008 fire that destroyed thousands of recordings in the company’s archive.

While the company acknowledges that many precious recordings were lost, it claims to have refuted the claims of the five artists who filed suit against the company in July; one of the artists, Hole, has been removed from the lawsuit, while the others, Soundgarden, Steve Earle and the estates of Tupac Shakur and Tom Petty, either also did not lose true master recordings, or, in the case of Soundgarden, were presented with evidence years ago about the extent of the losses their archive suffered.

“Faced with [the above evidence], Plaintiffs (or their attorneys, who seek to represent a putative class) seem to have abandoned their initial theory of the case and are fishing for a new angle and new plaintiffs,” the motion reads. “Most glaringly, Plaintiffs abandon their core allegation of fire losses and now suggest their claims have merit “regardless of whether any original master recordings of any plaintiff were or were not destroyed.”

“But even taking all of the FAC’s allegations as true, Plaintiffs fail to state a viable claim because the plain language of the governing recording agreements, read without Plaintiffs’ wishful and selective editing, undermines their claims. This inescapable reality is not “a factual issue . . . requir[ing] discovery” (Opp. 11); at the pleading stage, “a court must determine whether the alleged agreement[s] [are] ‘reasonably susceptible’ to the meaning ascribed to [them] in the complaint.”

A later section of the motion is titled “UMG Has Discharged Its Discovery Obligations to Date While Plaintiffs Have Engaged in a Fishing Expedition as Their Claims Collapse.”

The introduction to the motion concludes, “Given these realities, as well as the burdensome nature of Plaintiffs’ discovery requests and the lack of any prejudice, this Court should exercise its broad discretion to issue a stay of discovery.”

Since the extent of the fire’s damage was revealed in a New York Times article earlier this year, UMG has acknowledged that the destruction was indeed devastating and the company’s previous management did not fully reveal it. Yet it also said that the Times, which published a long list of artists whose archives were said to be destroyed, overstated the extent of the damage, saying that it was based on inaccurate or incomplete information.

UMG has attempted twice to have the artists’ suit dismissed, which seeks “50% of any settlement proceeds and insurance payments received by UMG for the loss of the Master Recordings, and 50% of any remaining loss of value not compensated by such settlement proceeds and insurance payments.” In a 2009 legal action against NBC over the fire, UMG reportedly valued its losses from the fire at $150 million.

In response, Ed McPherson, an attorney for the plaintiffs, said, “UMG has not acknowledged to us that any ‘precious recordings’ of any of the 140 artists that we have inquired about have been lost. Apparently, the $150 million that they reportedly received from NBCUniversal must have been for something else. And as far as their having ‘refuted the claims of the five artists who have filed suit,’ they have certainly not done so with anything that even approaches ‘evidence’ – which, sadly for UMG, is the thing they tend to require in court.”

The fire, which destroyed an estimated 500,000 master recordings by artists ranging from Billie Holiday to Nirvana, took place in a Los Angeles facility UMG had rented from NBC. “UMG did not protect the Master Recordings that were entrusted to it,” the lawsuit reads. “It did not take ‘all reasonable steps to make sure they are not damaged, abused, destroyed, wasted, lost or stolen,’ and it did not ‘speak[] up immediately [when it saw] abuse or misuse’ of assets,” it continues, quoting statements from the company’s website. “Instead, UMG stored the Master Recordings embodying Plaintiffs’ musical works in an inadequate, substandard storage warehouse located on the backlot of Universal Studios that was a known firetrap. The Master Recordings embodying Plaintiffs’ musical works stored in that warehouse were completely destroyed in a fire on June 1, 2008.

“UMG did not speak up immediately or even ever inform its recording artists that the Master Recordings embodying their musical works were destroyed. In fact, UMG concealed the loss with false public statements such as that ‘we only lost a small number of tapes and other material by obscure artists from the 1940s and 50s.’ To this day, UMG has failed to inform Plaintiffs that their Master Recordings were destroyed in the Fire.”

Despite the extent of the damage, a major-label attorney told Variety that artists’ attempts to sue UMG over the fire faced a steep challenge, because contractually most if not all of the physical master tapes were the property of UMG — not the artists. For that reason, the company was under no obligation to inform effected artists about the damage, the attorney said. The ownership distinction here comes down to the difference between the master tape or hard drive as a physical object, which in nearly all cases is the property of the label, as opposed to the copyrighted intellectual property (i.e. the sound recordings) contained on that master.



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