Back in January, Universal Music Group (UMG) was named in a class-action lawsuit for allegedly “withholding hundreds of millions of dollars in royalties from artists.” Now, the presiding judge has tossed the complaint without leave to amend.
Judge Jennifer L. Rochon just recently granted the major label’s motion to dismiss, with the plaintiffs, rappers Andres Titus and William McLean, having submitted the overarching action 321 days ago.
As we reported at the time, the artists, who released music together as Black Sheep, said they’d signed with PolyGram in 1990 before dropping an RIAA Gold-certified album entitled A Wolf in Sheep’s Clothing the following year.
More than three decades later, several of the project’s tracks have racked up millions of Spotify streams, including 41.44 million on-platform plays for “The Choice Is Yours (Revisited).”
But in the original action, the plaintiffs maintained that they’d been cheated out of due royalties when Universal Music accepted a reduced Spotify royalty rate in exchange for low-priced shares in the streaming platform.
Specifically, by allegedly failing to account for this equity stake in royalty payments, UMG kept somewhere in the ballpark of $750 million in allegedly owed compensation from the class, according to the initial suit.
However, as mentioned at the outset, the court has tossed the case, determining, among other things, that the contractually established two-year statute of limitations (“under New York law, parties to a contract can agree to shorten the statute of limitations”) bars most of the claims therein.
“Even accepting Plaintiffs’ alternative argument that UMG breached the contract again after Spotify’s IPO in 2018,” Judge Rochon wrote, “Plaintiffs’ failure to bring those claims within two years of UMG’s alleged breach still renders them untimely.”
Bearing in mind the two-year limit, the judge described as “time barred” each of Black Sheep’s claims excepting that concerning “lowered royalty payments issued after January 4, 2021,” when the suit was submitted. From there, though, the court also dismissed this final claim, finding that the “plain language” of the relevant agreement doesn’t support the breach-of-contract argument.
“The contract’s plain language does not support Plaintiffs’ theories of breach, Plaintiffs’ only timely claim – that UMG breached the contract by agreeing to lower royalties for which it did not compensate Plaintiffs – finds no support in the contract,” penned Judge Rochon.
“UMG’s alleged acquisition of Spotify equity is not solely attributable or traceable to the actual exploitation of a particular artist’s sound recording,” the judge continued. “Thus, because UMG’s Spotify stock does not count as ‘net receipts,’ UMG did not breach the contract by failing to account for its value when paying Plaintiffs their royalties.”
Lastly, regarding the decision not to give Black Sheep the chance to amend, the court indicated “that leave to amend is not warranted because it would be futile.”
At the time of this writing, the members of Black Sheep didn’t appear to have responded to the dismissal on Instagram. The latest posts from Titus, known professionally as Dres, center on The Choice Is Yours; the Paramount+ documentary tells the story of the veteran hip-hop artist and released today.