On February 13, 2014, Jenner & Block earned an important victory forclient UMG Recordings, when Judge Jesus G. Bernal of the U.S. District Court for the Central District of California granted UMG’s motion to dismiss, with prejudice, a lawsuit brought by singer Connie Francis primarily over the issue of the royalty rate payable on sales of digital downloads.
After granting two earlier motions to dismiss with leave to amend, the court’s dismissal of the fourth amended complaint ends the matter in the district court. The court had previously held that the royalty provision in the controlling recording agreement applied to all formats of records sold, including digital formats. Francis’ fourth amended complaint asserted that a provision in the agreement that required mutual agreement before records could be released was breached when UMG distributed previously released product in a digital format without any additional agreement between the parties. The court agreed with UMG that the contractual term “release” unambiguously referred to the initial release of records to the public, not to subsequent sales by different distributors or in different formats, and thus no further agreement was required. The court also dismissed Francis’ claim alleging underreporting of sales and royalties with prejudice, because, after multiple opportunities to amend, Francis made only conclusory allegations that were insufficient to state a claim.
This decision is the third litigation that the firm has won in the last year in which a court has rejected claims by recording artists for a higher royalty rate on download sales where the contract language unambiguously sets the rate for all records.