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Kevin Risto seeks class action status for legal dispute with US session musicians royalty fund

By | Published on Wednesday 1 July 2020

Kevin Risto

Songwriter and record producer Kevin Risto has asked a court in California to grant class action status to his legal dispute with American performer unions AFM and SAG-AFTRA and the IP Rights Distribution Fund that they set up. If granted, it would mean a win in the dispute would benefit any session musician due royalties from their music being played on online or satellite radio services in the US.

The two unions created the IP Rights Distribution Fund to collect various royalties due to session musicians, the most important of which is the Performer ER royalties due when the performing rights of a sound recording are exploited. In the US, that money is paid by online and satellite radio stations initially to the collecting society SoundExchange. Featured artists get their cut of that money directly from SoundExchange itself, but the allocation due to session musicians (5% of total income) is handed over to the IP Rights Distribution Fund which then pays the performers.

Risto’s lawsuit takes issue with a decision made by the trustees of the IP Rights Distribution Fund back in 2013 to start paying both AFM and SAG-AFTRA a 1.5% fee for the services and data they provide to the fund. He argues that the trustees violated their fiduciary duty to the fund’s beneficiaries, ie the session musicians, by allowing regular payments to be made to the unions that set it up.

For their part, the various defendants have argued that the fund’s governing document gives the trustees wide discretion on how best to run the royalty body and specific permission to pay the two unions for any services or information they provide. Which means that, although such payments only began in 2013, the right to pay the unions for their input was there from the start.

Risto intended his lawsuit to be a class action, benefiting all session musicians, when he first filed it in 2018. But on Monday he filed paperwork with the court seeking formal approval of that class action status, defining his class as “all non-featured musicians and non-featured vocalists, their agents, successors in interest, assigns, heirs, executors, trustees, and administrators, entitled to royalties under the Copyright Act after 22 Jul 2013”.

Among other things, Risto’s lawyers argue that class action status is appropriate for this action because, if it is successful, it will have demonstrated that all session musicians lost out when the union fees were agreed in 2013. But, given many beneficiaries likely receive nominal income from the fund – and given the complexities of cases like this – most performers wouldn’t be able to pursue their own legal action to secure compensation.

“A class action is superior in this case because there are thousands of class members, many of whom likely have relatively small claims, and the class-wide adjudication of their claims is the most efficient and economical option for the parties and the judiciary”, Monday’s court filing said.

“It is also highly unlikely that any class member would seek to pursue their own claim individually, and plaintiff’s counsel has not found any similarly filed litigation against the defendants for the claims at issue here”, it went on. “Furthermore, this litigation is complex and costly; it involves issues that require substantial targeted discovery of sophisticated defendants who have prolonged the productions of documents and witnesses at every step of this process”.