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Universal Music Says ‘Many’ Suing Artists’ Masters Were Not Damaged in 2008 Fire

UPDATED: Late Friday the attorneys representing Soundgarden, Steve Earle and the estates of Tom Petty and Tupac amended their lawsuit against Universal Music Group over damages to their music archives as a result of a 2008 fire.

While most of the amended complaint updated details in the original document — adding information about UMG’s alleged lack of transparency regarding the fire, the reversion rights guaranteed to the artists, and additional claims of negligence, reckless conduct, and misrepresentation by omission for failure to disclose that the tapes were stored in “a well known firetrap” on the Universal Studios lot — most notable is the fact that the band Hole was dropped as a plaintiff “based upon UMG’s representations that none of Hole’s masters was destroyed (subject to confirmation).”

In a response to the amended complaint issued today, UMG claims “we have already determined that original masters for many of the artists named in the lawsuit were not lost in the 2008 fire.”

There are four artists remaining in the lawsuit. While a rep for the company declined comment beyond the statement, it seems likely that Tupac’s archives may be in the possession of his estate, given the extensive number of posthumous releases from his archives over the years. Also, Petty’s estate is in a state of some confusion owing to a lawsuit between his daughters and his widow, so it seems possible that information regarding his masters might be incomplete.

UMG’s statement reads in full: “Over a month ago, without even knowing if the 2008 fire on the NBC/Universal Studios lot affected their clients, plaintiffs’ attorneys rushed to pursue meritless legal claims. UMG’s dedicated global team is actively working directly with our artists and their representatives to provide accurate information concerning the assets we have and what might have been lost in the fire. Even though our work is not yet complete, we have already determined that original masters for many of the artists named in the lawsuit were not lost in the 2008 fire. We will not be distracted from our focus on providing our artists with full transparency even as the plaintiffs’ attorneys continue to pursue these baseless claims.”

Ed McPherson, attorney for the plaintiffs, responded, “Well, isn’t that great! After 11 years of assuring artists that basically nothing was lost in the fire, UMG is actually conducting an investigation to see what was lost in the fire. Perhaps this wouldn’t be such a daunting endeavor if (1) UMG had created an actual inventory of the masters that they were storing; and (2) UMG had enlisted its dedicated global team 11 years ago, when the fire destroyed the warehouse and everything in it. And as for UMG’s ‘full transparency,’ perhaps UMG should be asked: (1) why is the vast majority of the court file in the NBC litigation redacted; (2) why won’t you give the Plaintiffs any unredacted documents including those showing how your loss was evaluated; and (3) why have you filed a motion to stay all discovery in the case until November 4?”

Sources close to the situation confirm to Variety that UMG gradually has been reaching out to artists to inform them of the state of their archives. Last month, Hole guitarist Eric Erlandson told the group he had been informed that “no masters of ours were lost, after all. But we do not know for sure yet.”

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, was overstating the extent of the damage, saying that it was based on inaccurate or incomplete information.

The updated complaint was filed in response to UMG’s attempt last month to have the lawsuit dismissed. The artists’ suit 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.

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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