A New York state appellate court on Jan. 25 rejected a class action suit brought by recording artists who claimed their record deals didn't permit the major labels to exploit their music in digital fo

A New York state appellate court on Jan. 25 rejected a class action suit brought by recording artists who claimed their record deals didn't permit the major labels to exploit their music in digital format.

They also alleged that the labels owed a fiduciary duty to the artists. The companies breached this duty, they argued, by "recklessly" exposing the artists' interests and property rights to the risk of music piracy by releasing their recordings on CDs.

Representing a class of artists who signed record deals between 1956 and 1996 -- before the Digital Millennium Copyright Act -- Tony Silvester with the Main Ingredient, Lester Chambers with the Chambers Brothers, Carl Gardner with the Coasters and Bill Pinkney with the Original Drifters filed suit in New York Supreme Court in 2002. Defendants are Time Warner, Universal Music Group, Sony Music Entertainment and BMG Entertainment.

The plaintiffs contended that thousands of recording artists who signed record deals with the labels' predecessors never granted rights to exploit their music in any format other than analog. In addition, they asserted that the American Federation of Television and Radio Artists' Code of Conduct supported this interpretation.

The class sought a share of the labels' settlement in their litigation against MP3.com and Napster plus other remedies.

The recording agreements provided to the court, however, included a provision that conveyed full ownership of the master recordings with an unrestricted right to manufacture, use and distribute the productions "by any method now known, or hereafter to become known."

The appellate division of the New York Supreme Court confirmed the lower court ruling. It held that this provision permitted the labels to exploit the recordings in any manner desired.

Further, the AFTRA provisions did not affect the terms of the recording contracts.

Finally, the court affirmed the holding that there is no fiduciary relationship under New York law between a record company and an artist under a recording contract where the artist assigns rights to recordings in return for royalties.

Case: Tony Silvester, Lester Chambers, Carl Gardner and Bill Pinkney, individually and on behalf of all others similarly situated vs. Time Warner Inc., Universal Music Group Inc., Sony Music Entertainment Inc. and BMG Entertainment Inc.
Court: New York Supreme Court, Appellate Division, First Department, Manhattan
Counsel for the Artists: Lawrence E. Feldman, Feldman & Associates, Jenkintown, Penn.; Fred Isquith, Wolf Haldenstein Adler Freeman & Herz, New York; Richard Bennett, New York
Counsel for Time Warner: Katherine Forrest, Cravath, Swaine & Moore, New York
Counsel for BMG Music: Chuck Ortner, Proskauer Rose, New York
Counsel for Universal Music Group: Andrew Bart, Pryor Cashman Sherman & Flynn, New York; Jeffrey Goldman, Mitchell, Silberberg & Knupp, Los Angeles
Counsel for Sony Music Entertainment: Jay Cohen, Paul Weiss Rifkind Wharton & Garrison