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Legal dispute over US unions’ performer ER fees close to $8 million settlement

By | Published on Tuesday 9 November 2021

Kevin Risto

A dispute over the fees charged by American performer unions AFM and SAG-AFTRA in relation to the payment of equitable remuneration royalties to session musicians in the US is seemingly close to being settled. According to Law360, the judge overseeing the case – Christina A Snyder – gave preliminary approval to a proposed settlement deal yesterday.

This all relates to a lawsuit filed in 2018 by songwriter and record producer Kevin Risto, which formally became a class action last year. Risto took issue with the management of the IP Rights Distribution Fund, an entity set up by AFM and SAG-AFTRA to administer royalties due to performers.

That includes the so called Performer ER royalties that are due to session musicians whenever their music is played on online or satellite radio services in the US. That money is initially collected by the collecting society SoundExchange, which then directly pays on any royalties due to record labels and featured artists. However, the cut of the cash due to session musicians is handed over to the IP Rights Distribution Fund, which then works out which musicians need paying.

Risto’s lawsuit took issue with a decision made by the trustees of that fund back in 2013 to start paying both AFM and SAG-AFTRA a 1.5% fee for the services and data they provide to help with the payment of royalties. He argued 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 argued that the fund’s governing document gave 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 meant that, although such payments only began in 2013, the right to pay the unions for their input was there from the start.

AFM and SAG-AFTRA unsuccessfully tried to have Risto’s litigation dismissed back in 2018. Then, earlier this year, with the case now a class action that could benefit some 30,000 musicians, they asked the judge to grant summary judgement in their favour. However, judge Snyder denied that request, meaning the dispute was set to proceed to a full court hearing.

But not now, given that a settlement has seemingly been reached. Under the proposed settlement deal, a $5.35 million fund will be set up to benefit class members, while a separate $2.6 million administration fund will be established to cover legal costs. Then, moving forward, the two unions would each receive a fixed annual fee of $382,500 for the data and services they provide, rather than a percentage cut.

In a short hearing Snyder granted a motion from Risto’s side for preliminary approval of the settlement that has been negotiated, with the judge stating that it seemed like everything was now “well in hand”.