Legal and Management

Universal Music Group Can't Halt Discovery in 2008 Masters Fire Lawsuit

Universal Music Fire
AP Photo/Ric Francis, file

 In this June 2, 2008 file photo, Los Angeles County firefighter Darrick Woolever examines metal that needs to be removed at the Universal Studios Hollywood back lot, a day after a fire destroyed the New York Street facade, in the Universal City section of Los Angeles.

A California federal judge has ruled Universal Music Group (UMG) must hand over requested discovery evidence in the class action lawsuit brought by Soundgarden, Tom Whalley (trustee of the Afeni Shakur Trust), Jane Petty and Steve Earle, who say their master recordings were destroyed or damaged in the June 1, 2008, fire at the Universal Studios backlot. In June, the group filed the suit agains UMG for breach of contract, negligence, reckless conduct, misrepresentation by omission as well as other causes of action.

On Monday, district court Judge John Kronstadt denied UMG's request to postpone handing over relevant discovery in the case. The label requested the discovery stay both in written motions and during oral arguments held on Nov. 14, arguing that discovery was irrelevant until the judge made a decision first on whether the court had jurisdiction over the case and whether the action should be dismissed. They argued that a stay would give the court time to make those decision "before invasive, non-jurisdictional discovery proceeds." 

After filing their lawsuit against UMG in June, seeking to recover half of any settlement proceeds and insurance payments received by UMG and half of any remaining loss of value not compensated by such settlement proceeds and insurance payments, attorneys for the band Soundgarden have been demanding UMG hand over key discovery evidence. In addition, they asked that UMG hand over definitive information that shows which music artists lost their original masters and whether the company collected insurance money from the loss from the vault blaze. The band's attorneys filed court papers demanding what they called an end to UMG's "discovery games" and are asking the court to order UMG to produce the information they requested. 

In return, UMG accused the class action attorneys of merely using discovery as a fishing expedition "for a new angle and new plaintiffs." UMG argued that if they are required to comply with the discovery requests, they "will be harmed by being forced to share hundreds of thousands of pages of documents -- including over 10,000 of artists' confidential recordings agreements with personal and business-sensitive terms to entertainment lawyers representing other artists, without any notice to those artists already under contract -- before threshold questions related to both jurisdiction and the sufficiency of Plantiffs' claims are ruled by this Court." 

UMG filed a motion to stay discovery informing the judge that investigations had concluded that no master recordings of Earle, Tupac or Petty were lost due the fire. The UMG investigation also concluded that while two master Soundgarden recordings were lost in the fire, UMG was able to issue a re-release of that album using a digital copy. In addition, UMG reported that no other Soundgarden multitrack masters were affected by the fire and that "UMG has viable copies of al the affected assets except an alignment tones reel" and that a member of Soundgarden had been informed about the loss of certain Master recordings. 

Yet, during the discovery process, Soundgarden attorneys demanded that UMG "identify all artist with master recordings" that may have been damaged or lost as a result of the fire. They argued that if UMG received insurance money from a lost recording that the contract terms required "sums derived from master recordings to be shared." UMG tried to persuade the judge that discovery should not to proceed until there had been a ruling on their motion to dismiss deciding whether the court even had jurisdiction over this case. 

Judge Kronstadt denied UMG's request for the stay, ruling that "some of the requested discovery goes to the jurisdictional issue." In addition, Kronstadt ruled that the requested limited discovery of responding interrogatories and producing documents is not undue burdensome and merely calls for UMG to provide certain information that is relevant to the claims in this case. 

Attorneys for Soundgarden and the other class action plaintiffs say they were pleased with the ruling. 

"We are very pleased that, after 11 years, UMG is finally being compelled to tell its artists which masters were destroyed and which masters it told its insurance company were destroyed," says Ed McPherson, who represents the plaintiffs.

Co-counsel Howard King adds, "We are grateful that the Court has ordered that UMG's veil of secrecy be lifted. We are hopeful of now learning the truth about how many master recordings UMG claimed were destroyed when it was a plaintiff and how many master recordings it claims were actually destroyed now that it is a defendant."

A UMG spokesperson called the efforts by the plaintiffs attorneys "desperate and meritless." 

"Immune to the facts, these plaintiffs' attorneys continue their desperate and meritless efforts. Ironically, despite their statements today, the facts are that none of the original masters for these attorneys' clients -- save one client -- were harmed, and that one client was not only notified years ago about the loss, but worked closely with UMG in a rerelease of that material. We are confident the rule of law is on our side, and that we will prevail on the merits of this lawyer-driven lawsuit," says a UMG spokesperson. "In the meantime, we will continue to work directly with our artists to provide transparent information about all the assets in the company's archives."