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Hausfeld LLP Files Class Action Against Universal Music Group - Chuck D of Public Enemy Claims Improper Royalties Paid for Digital Downloads

San Francisco, CA (November 2, 2011) -- Hausfeld LLP filed a nationwide class action lawsuit today in San Francisco federal court on behalf of Universal Music Group (UMG) recording artists. The lawsuit contends that UMG routinely miscalculates the royalties owed to artists for digital downloads, such as MP3s and ringtones, by treating them as “sales” of physical records rather than “licenses.” Carlton Ridenhour, who performs under the name “Chuck D” and is one of the founding members of the rap group “Public Enemy,” is the named plaintiff in the action.  Public Enemy is one of the most successful music groups of the 1980s and 1990s with hits such as “Fight the Power,” “Bring the Noise,” and “Don’t Believe the Hype”.

The Complaint alleges that UMG utilizes standardized contracts that calculate lower artist royalties for album “sales” as opposed to “licenses.” License royalty rates are more favorable to artists because record companies do not have the associated marketing and packaging costs or the possibility of product returns that may occur with physical album sales. Artists’ contracts that were in place prior to the advent of digital music distribution generally allow record companies to license master recordings to third parties. The lawsuit contends that although UMG’s contracts with digital music providers (like iTunes) specifically characterize digital distributions as licenses, UMG has applied the much lower “sales” royalty rate to digital downloads and underpaid its artists by hundreds of millions of dollars.

Chuck D’s lawsuit follows on the heels of a decision by the Ninth Circuit Court of Appeals in a similar case brought by Eminem’s production company (F.B.T. Productions, Inc. v. Aftermath Records, 621 F.3d 958 (2010)). There, the Court found that UMG improperly calculated Eminem’s digital downloads royalty rate as a “sale” rather than a “license.” After the Supreme Court denied review, the case returned to the district court for further proceedings.

“As digital downloads have emerged as the primary method by which many consumers acquire music, UMG has systematically failed to pay appropriate royalties to musicians for these downloads,” said James Pizzirusso, a partner at Hausfeld LLP involved in the case. “Chuck D has been ‘fighting the power’ for over two decades and will continue to do so through this suit in order to help all musicians, including many legacy artists who are living on fixed incomes.” 

Hausfeld LLP has an active entertainment and sports law practice and represents athletes and artists in various other class actions.  Other counsel in the case include Pearson Simon Warshaw & Penny LLP, a class action law firm in California; and Provosty & Gankendorff, L.L.C., an entertainment law firm in New Orleans.

Hausfeld LLP is one of the leading class action firms in the world with offices in Washington, DC; San Francisco, CA; Philadelphia, PA; and London, UK and affiliated firms around the globe. A copy of the Chuck D complaint is available to downloading below. Hausfeld LLP urges musicians to contact the firm to learn more about their legal rights.  For additional inquiries, please send an email to: digitaldownloads@hausfeldllp.com.

Practice Areas: Sports and Entertainment, Antitrust / Competition

 

Supporting Documents

» Chuck D. v. UMG Complaint (PDF)