A jury has rendered its decision in a contentious trial brought by the band A Day To Remember against its label Victory Records for breach of contract over several issues regarding royalties it felt were owed. The band won three key issues in the case -- over fulfilling its contract, controlling its publishing and over digital royalty withholdings -- while Victory received its own favorable decision over the band's master recordings. But money talks and, at the end, A Day To Remember was awarded $4.02 million.
“We went into trial seeking damages of $6 million, while the other side was seeking $9 million,” one of the band’s lawyers, Will Parsons with the firm Shackelford Bowen McKinley & Norton, LLP, tells Billboard. (The law firm of Locke Lord LLP also represented the band.) “With the verdict, we got $4 million and they got nothing.”
One of Victory’s lawyers, Robert Meloni with the firm Meloni & McCaffrey P.C. which handled the case for the label along the firm of Levenfeld Pearlstein LLC, disputes those numbers -- in a bit of a hair-split, Meloni says the band was seeking $10 million and was awarded $4 million.
The jury found that Victory owns the recorded masters and the band owns its music publishing. It also found that the band had fulfilled its contractual obligations and does not owe Victory any more music.
Meloni, in a statement, points out that $2.8 million of the decision covers royalties and interest on those royalties, which the label owed A Day To Remember regardless since (among other reasons) Victory stopped paying out royalties in 2012 following what Victory construed as a breach of the merchandising clause of its contract. The other $1.2 million is related to a claim over incorrectly withheld reserves. Meloni says Victory has plans to appeal that part of the verdict.
As part of the lawsuit, A Day To Remember, in a unique interpretation, claimed it fulfilled its obligation by delivering “at least 13 albums” to Victory, even though it only released three studio albums. The other ten, the band argued, were through releases of different album formats, such reissues and deluxe versions of the same album. For example, the band counted its album For Those Who Have Heart as four separate releases -- the initial release, a digital reissue, a CD reissue and a DCD reissue. The other albums issued by Victory, Homesick and What Separates Me From You, were treated similarly.
In a separate deal, the band and the label also issued a re-recording of its first album, Old Record (originally titled And Their Name Was Treason). Victory's releases of A Day To Remember’s four albums have scanned 1.22 million units, according to Nielsen Music.
The jury didn’t buy that interpretation of album counts, but it did agree that two live albums, released digitally through iTunes, along with its three studio albums were enough to fulfill the band’s contractual obligations.
The trial also opened a window into the structure of "major indie" label deals. Victory would pay A Day To Remember a $20,000 advance in support of its first album and $15,000 for the publishing on that album. Subsequent albums would also receive (undisclosed) advances. The royalty structure was 11.5 percent of the suggested list price for its first album, with that rate increasing by 1 percentage point for each subsequent record. If an album reached sales of 100,000, that rate would increase by half of a percentage point. In a separate deal, Victory also agreed to pay $1.50 a unit for publishing and record royalties for “Old Record.”
During the lawsuit, the band also tried to claim it was owed a higher royalty rate, to the tune of $3 million, for music released digitally by Victory, arguing that licensed deals require a higher payment than the standard artist royalty, an argument dismissed by the Judge before the case was brought to trial.
“In March 2016, District Court Judge John Lee agreed with Victory and dismissed the band's Digital Download claim and then, on November 2, 2016, just one week before the commencement of the jury trial, reaffirmed that decision by denying the band's motion for reconsideration,” according to a statement from Meloni, Victory Records' lawyer.
In another dispute on merchandising, Victory withheld $100,000 when it claimed the band had breached the merchandising clause of its contract by selling directly to consumers through a website, when it only had the right to sell merchandise at its concert. The jury found that A Day To Remember was in breach by selling through the web channel, but there was no monetary judgement on the point -- a hollow victory for the label.
However, that phantom $100,000 seems to have been rolled into the unliquidated reserve issue, which resulted in the $1.2 million award that Victory’s lawyer said they would challenge.