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Songwriter’s lawsuit against session musician royalty fund allowed to proceed

By | Published on Thursday 8 November 2018

Kevin Risto

A judge in California has declined to dismiss a lawsuit launched by songwriter and record producer Kevin Risto over the fees American performer unions AFM and SAG-AFTRA charge the royalty distribution fund they set up.

Risto sued over a decision made by the trustees of the Intellectual Property Rights Distribution Fund back in 2013 to start paying both AFM and SAG-AFTRA a 1.5% services fee.

The Fund collects 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 this means the session musicians’ share of income collected by SoundExchange, though the fund also distributes Performer ER royalties that come in from elsewhere in the world.

The defendants 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 who set the Fund up 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.

Based on that argument, the Fund’s trustees and the two unions urged the court to throw out Risto’s action. However, while judge Christina Snyder has removed some elements of the lawsuit, she ruled on Tuesday that there was enough substance to the songwriter’s core allegation – that of breach of fiduciary duty on the trustees’ part – for the case to proceed.

Legal reps for Risto welcomed the ruling. According to Law360, attorney Jordanna Thigpen said: “We are very pleased with Judge Snyder’s decision as it will allow these claims to proceed so that we may work towards recovery of these funds for artists. It is very important for claims for breach of fiduciary duty to proceed especially when there is no other method of challenging a given trustee’s conduct, as is the case here”.