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Lenny Williams has another go at making his Warner Music royalty dispute a class action

By | Published on Friday 5 March 2021

Warner Music

1970s soul singer Lenny Williams is having another go at getting his royalty dispute with Warner Music approved as a class action that could also benefit other artists signed to the major.

Williams, who fronted R&B group Tower Of Power, sued Warner in 2018 over a common royalty gripe among artists, which is what happens to streaming income as it passes through a major’s international subsidiaries.

He claims that Warner allows its different divisions around the world to deduct fees from his streaming income before passing the money to the label he’s directly signed to in the US.

His percentage royalty share is then calculated based on what the US label receives, but – he argues – the maths should be done on the at-source income, ie what the streaming service paid into whatever Warner subsidiary took payment.

Williams sought to make his lawsuit a class action so that a positive outcome could benefit any artists signed to Warner. However, the major argued that there were some specifics about Williams’ record contract that meant it wasn’t representative of the majority of the deals it signs with artists, making this dispute inappropriate for a class action.

In Williams’ original lawsuit he identified three groups of artists who should be part of the class. The first group would have more modern contracts with Warner that mention streaming. The second group would have pre-digital contracts that don’t mention streaming, but which do talk about ‘licensing income’ (which, artists would argue, should apply to streams). And the third group are artists with record contracts that don’t mention streams or licensing.

However, Williams himself falls into the latter group, which – Warner argued in court – makes his claim more complicated. The judge overseeing the case concurred, noting that, unlike most other artists in his proposed class, he would need to prove three things to win his action.

So, not only that his royalty should be calculated based on at-source income, but also what his streaming royalty rate should be. And that he is even due a share of digital income to start with, given his record contract only talks about royalties in relation to physical copies.

Williams was back in court this week – this time at the Ninth Circuit appeals court – to argue that the judge got in wrong when he declined to make his lawsuit a class action. And that, his lawyers argued, was mainly because of the small sample of contracts Warner Music chose to share with the court.

According to Law360, attorney Bobby Pouya said that while there could be something like 40,000 artist contracts relevant to this case, Warner was only obliged to share a hundred, and it got to pick which contracts it shared. Therefore, Pouya argued, Warner was able to skew things to make it look like his client’s record contract was unusual.

He told the court: “Typically when we do accept a sample we negotiate that with the defendant. It’s not just self-selected and they put something out there. This is not the proper way to conduct discovery in a case like this, where the defendants have most of the information, and the lack of discovery as we’ve indicated, affected both of the claims’ unique defences and undermined the court’s ability to conduct a proper analysis”.

Needless to say, Warner countered that the lower court got it right. Meanwhile, its lawyers argued, the sample of hundred contracts were very representative of the bigger picture, including deals from different decades and different imprints of Warner Records.

It remains to be seen whether the Ninth Circuit concurs with Warner and the lower court, or sides with Williams.