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US performer unions say dispute over royalty fund fees should be dismissed

By | Published on Tuesday 6 November 2018

Kevin Risto

The American Federation Of Musicians and fellow US performer union SAG-AFTRA have asked a Californian judge to dismiss a lawsuit over the fees they take for their involvement in the fund that pays session musicians their cut of performing rights income.

AFM and SAG-AFTRA set up the Intellectual Property Rights Distribution Fund to distribute royalties due to American session musicians under copyright laws in both the US and abroad. The fund collects a number of such royalties, though the most important is the performer’s cut of performing rights income generated by sound recordings on which they appear, what is commonly known as Performer Equitable Remuneration.

In the US, that means the 5% of monies collected by collecting society SoundExchange from online and satellite radio services that is allocated to session musicians. Similar ER royalties from elsewhere in the world also flow in via agreements with other collecting societies representing Performer ER rights in other territories.

Grammy winning songwriter and record producer Kevin Risto sued the trustees of the Fund – as well as AFM and SAG-AFTRA – over a decision in 2013 to start paying each of the unions 1.5% of the monies distributed by the Fund in each period. Those payments are in return for the information and services the unions provide the royalties body.

Risto’s class action claims that the trustees violated their fiduciary duty to the beneficiaries of the Fund by allowing regular payments to be made to the unions, while also alleging that the two organisations paid themselves expenses in addition to their service fees.

However, according to Law360, the defendants argue that the case should be dismissed because the lawsuit fails to demonstrate how the trustees have done anything wrong. They point out that said trustees were given wide discretion on how to administer the fund when it was established, and that its “governing document specifically authorises the trustees to compensate the unions for the information and services they provide”.

We now await judge Christina Snyder’s response.