American Fed. of Musicians Suffers Setback in Pension Suit Against Majors

A U.S. district judge has delivered a setback to the American Federation of Musicians, which filed suit a year ago alleging that the three major labels and Hollywood Records were in breach of a contract by not making pension fund payments from foreign streaming and non-permanent downloads, along with foreign and domestic ringback tones.

U.S. Judge Gregory Woods has tossed one of three counts against the defendents, saying that the lawsuit will proceed on whether the labels are in breach for not making payments on downloads and ringbacks. But the Southern District of New York judge eliminated streaming revenue royalty payments from the suit.

Through collectively bargained "Sound Recording Labor Agreements," the three majors and Hollywood are supposed to make payments of 0.5 percent of revenue derived from those three digital channels to the union’s pension fund. (Any royalty payments from CDs and permanent downloads are not a part of the lawsuit.)

According to the initial lawsuit, filed Aug. 10 2015, only Sony Music Entertainment appears to have made payments for foreign and domestic ringbacks, but like the other labels named as defendants, the company did not make payments for non-permanent downloads, the suit alleges. According to the initial complaint, the record labels concede they owe royalties on domestic ringbacks but are not obligated to pay royalties to the pension fund on the ringbacks.

The plaintiff asks the court to compel the labels to make payments (with interest) to their pension fund, and for the defendants to be assessed an additional 20 percent in damages. Lawyer fees and other legal costs are also sought.

The lawsuit was filed on behalf of AFM by the law firms of Meyer Souzzi, English & Klein P.C. and Bredhoff & Kaiser P.L.L.C. In addition to dismissing one count, the Judge order the trial to proceed and asked the parties to submit a revised proposed case management plan by Aug. 30.