The key to her allegations is that the money “Daydream Believer” made in foreign countries was split once before it reached EMI North America, which then split the remainder 50-50 -- according to the contract -- with the Stewarts. The first split sent some of the profits to foreign publishers that distributed the song in their respective territories.
But those foreign publishers aren’t independent entities. They’re direct subsidiaries of EMI, which “exercises total control over these subsidiaries to create substantial profits and increase the corporate bottom line,” the complaint reads.
The London-based EMI arranged for each foreign subsidiary to keep 50 percent of the song’s earnings in its territory, which Stewart alleges was just keeping money in its own pockets.
The fact that the family now gets only 25 percent adds up to a breach of contract, Stewart says. In addition, she's claiming the publisher inappropriately deducted fees from the song's earnings in the U.S. and Canada, allocating them to third-party revenue collection agencies without the contract's sanction. She's suing for breach of good faith and fair dealing and violations of California's Unfair Competition Law as well, and she demands $450,000 in damages on top of the unpaid royalties she alleges she's owed. She's represented by Nicholas Carlin at Phillips, Erlewine & Given.
It isn't the first case of its kind for EMI. The music publisher faced a similar lawsuit from the family of Duke Ellington last year, and it won.
In that case, the jazz musician's grandson Paul Ellington argued that the contract had been drafted when foreign publishers were independent and not affiliated with larger publishers like EMI, so it applied differently to the modern music industry. A New York appellate court judge found that argument "immaterial."
The language in Ellington's contract, which granted him "fifty (50%) percent of the net revenue actually received by [EMI]...from foreign publication," is very nearly identical to the language in Stewart's. The New York court found it to mean that even though EMI had eventually bought the foreign publishers, the division of earnings shouldn't change. The California court in the present case could decide differently, however.
But Donald Zakarin, a partner at Pryor Cashman who has frequently represented EMI, including in the Ellington lawsuit, thinks the publisher's argument will hold up in the same way. "There seems to be among some people a naiveté about foreign sub-publishing. Every case that has addressed foreign sub-publishing has gone and said, 'yes, foreign sub-publishers are entitled to the foreign sub-publishing fees,'" he tells THR. "These are agreements that have been in place for decades. EMI has not changed these agreements; it’s not deprived the writer of a penny."
"It's a bewildering claim people seem to make," he added.
This article was first published by The Hollywood Reporter.