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Universal adamant it doesn’t have to share 2008 fire insurance pay-out with artists

By | Published on Tuesday 5 November 2019

Universal Music

The legal dispute over the 2008 fire at Universal Music’s Hollywood storage unit reached court yesterday, with a legal rep for the major insisting that artists do not have a right to share in any damages or insurance money that the music company collected as a result of their master tapes being destroyed.

The 2008 fire at a facility owned by the Universal movie company became newsworthy again earlier this year after the New York Times ran a report accusing the Universal music company of covering up the scale of the losses caused by the blaze at the time of the incident. It claimed that hundreds of artists potentially lost master recordings in the fire, most of which had never been told about the losses.

While Universal’s PR team went into damage limitation – insisting there were numerous errors in the NYT article while concurrently contacting those artists who were affected by the fire a whole decade ago – lawyers started approaching some of those same affected acts. A class action lawsuit then followed with Soundgarden, Hole, Steve Earle, and the estates of Tupac Shakur and Tom Petty, all listed as plaintiffs.

Universal’s lawyers subsequently filed a motion seeking to have the case dismissed, and it was that proposal that was being debated in court yesterday. The major argues that some of the artists involved in the litigation didn’t even lose any masters in the fire, and those that did still have access to back-up or digitised versions of the recordings on the lost tapes.

Beyond that, Universal’s legal arguments mainly centre on the specifics of record contracts. Under a classic US record deal, the music firm argues, the label not the artist owns any master recordings that are created. And while the artist will have a contractual right to receive royalties whenever their recordings are exploited, that doesn’t extend to sharing in insurance pay-outs and damages received in relation to warehouse fires.

According to Courthouse News, lawyer Scott Edelman, speaking for Universal, told the court: “Artists have specified rights to royalties. Everything else doesn’t belong to them. Artist don’t have an interest in the masters. Period. Full stop”.

Edelman added that, because of back-ups, the fire hadn’t stopped any of the artists involved in the lawsuit from exploiting their recordings and receiving royalties from that exploitation. But lawyers for the artists insisted that when Universal sued Universal Studios over the fire and claimed on its own insurance policy, it did so on the basis that damage caused by the blaze would have a negative impact on future income.

Moreover, the artist repping lawyers added, while the labels may own the master recordings that were lost, the artists should still share in the insurance money. Because, in addition to the royalties paid on core recorded music revenue streams, most record contracts provide a 50/50 split on any extra income generated by any other uses of any one sound recording. That principle should apply to the insurance pay-out on the lost tapes, they argued.

Alongside all that, there are also some questions around the statute of limitations and the jurisdiction of the Californian courts in relation to this case.

On the latter point, lawyers for the artists said they needed a full list of acts whose recordings were lost in the fire to inform their arguments, but that Universal continued to hamper their discovery requests. The music company has previously argued that lawyers want that list in a bid to find other clients in case it turns out the plaintiffs currently linked to the action have no claim.

The judge hearing all this hasn’t as yet given any indication as to when he will rule on Universal’s bid to have the whole case dismissed.