Universal Music Group has emerged victorious in a legal dispute over alleged damages sustained in a 2008 vault fire, with a judge dismissing a class action suit originally brought last year by several artists and estates including Soundgarden, the Tupac Shakur estate, Steve Earle and Hole.
The decision, filed Monday by Judge John A. Kronstadt and obtained by Rolling Stone, wraps up a legal battle that began last summer after The New York Times Magazine reported that the damages sustained in the 2008 fire were initially underreported and potentially included the loss of over 500,000 recordings, including some original master tapes. The ensuing suit accused UMG of not doing enough to prevent the fire, concealing the extent of the destruction from artists while simultaneously pursuing litigation and insurance claims to recoup losses. It claimed that UMG took in settlement proceeds and insurance claims valued at $150 million and sought damages worth half that, plus half of any additional losses.
Judge Kronstadt, however, dismissed five of the six causes of actions contained in the original filing, including allegations of breach of contract, negligence and reckless conduct.
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“Judge Kronstadt’s decision fully dismisses the Soundgarden litigation and entirely rejects the only remaining plaintiff’s arguments,” a representative for UMG said. “As we have said all along, the New York Times Magazine articles at the root of this litigation were stunning in their overstatement and inaccuracy. As always, we remain focused on partnering with artists to release the world’s greatest music.” A lawyer for the class action suit plaintiffs, did not immediately reply to a request for comment.
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Judge Kronstadt’s decision comes after four of the five original plaintiffs dropped out of the suit: Hole was the first to leave last August, while Soundgarden, the Tupac estate and Earle followed in March. As such, Jane Petty, Tom Petty’s ex-wife, was the only plaintiff left and Tom Petty’s contract with MCA — which was later acquired by UMG — effectively served as the basis for much of the decision.
Petty did get one “win,” but it was ultimately insignificant. Judge Kronstadt ruled the complaint couldn’t be “time-barred,” despite a statute of limitations on breach of contract charges, because it was reasonable that she only learned about possible damages last year with the publication of The Times piece. But that meant little considering Judge Kronstadt wasn’t swayed by any other arguments in the plaintiffs’ suit.
He dismissed the argument that UMG was obligated to pay Petty a portion of the recovery settlement, which the plaintiff unsuccessfully tried to characterize as a “license” that ought to pay out royalties. Judge Kronstadt also dismissed a bailment argument that UMG failed to properly maintain a valuable placed in its possession because UMG, not Petty, owns the master tapes.
Additionally, the judge dismissed a negligence claim by noting Petty’s contract with MCA didn’t contain any specific language that would entitle him to certain revenue from insurance claims, and that there was no precedent “to support imposing a tort duty on UMG to exercise reasonable care to avoid economic loss in storing its own property — the Master Recordings.” A reckless conduct claim was also dismissed because the original complaint “fail[ed] to allege adequately that UMG owed Plaintiff a duty of care as to the safekeeping of Master Recordings.”
While Judge Kronstadt’s decision is a major blow to the plaintiffs, a new complaint is technically still possible, though it would have to be centered around a completely different set of legal arguments. It’s unclear if any such suit is in the works.
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