Legal and Management

Coachella Radius Clause Lawsuit Moving Ahead After All

Coachella
Frazer Harrison/Getty Images for Coachella

A general view of the atmosphere during day 1 of the 2014 Coachella Valley Music & Arts Festival at the Empire Polo Club on April 11, 2014 in Indio, Calif.

Oregon festival Soul'd Out's challenge to the exclusivity requirements was dismissed last year, before a court of appeals overturned that decision in May.

A challenge of Coachella's restrictive radius clauses is moving forward, after an Oregon judge reversed his 2019 ruling to dismiss the case.

On Wednesday (Aug. 19) Oregon District Court Judge Michael Mosman ruled that the lawsuit filed by Soul’d Out Music Festival founders Nicholas Harris and Haytham Abdulhadi could now proceed, bringing the dispute over the expansive radius clause closer to a possible trial. In March 2019, Mosmon dismissed the lawsuit, arguing that Soul’d Out Music Festival could not sue Coachella owner AEG because it was not a party to the contracts that Coachella entered into with artists. That decision was overturned 14 months later when a three-judge panel of the Ninth Circuit Court of Appeals found that Soul’d Out Music Festival had been harmed by the radius clause and had a right to challenge the contract's validity.

Promoters often rely on radius clauses to protect the millions of dollars they pay artists to perform at major festivals and prevent competitors from cannibalizing sales, but Soul’d Out promoters say AEG is interfering with their business by restricting who can play their event, located more than 1,000 miles north of Indio, California, where Coachella takes place each year. In 2018 Harris and Abdulhadi had approached SZA to play their Portland, Oregon festival, but were turned down because of the terms of Coachella's radius clause. The men also claimed that five-piece funk/soul group Tank and the Bangas had confirmed for Soul’d Out in 2018, only to later cancel after the radius clause complications became an issue.

"Although Soul’d Out is not a party to the artists’ contracts with AEG, we have previously determined that an injured party may assert tort claims predicated on a contract’s alleged invalidity, despite not being a party to the contract," a May 20 decision from the appeals court reads. "Soul’d Out is seeking to vindicate its own rights -- namely its alleged right to enter into contracts with artists free from AEG’s wrongful interference. No plaintiff is better suited to assert the tort claims alleged here, and there is therefore no prudential reason to deny Soul’d Out standing."

The case was sent back to Oregon District Court, where Mosman ruled against AEG's outstanding claims seeking to dismiss the case, noting that attorneys for Soul’d Out had insisted that "some of these arguments require further factual development" during a virtual hearing. "Presented with the opportunity for more briefing, on the theory it would help me me better understand the Ninth Circuit's ruling, I agree," Mosmon said.

The case will now move into the discovery phase with lawyers for Soul'd Out expected to subpoena artist contracts for the festival and internal communications. The public first learned the details of Coachella's highly restrictive radius clause -- which restricts artists playing Coachella from playing any festival in North America from Dec. 15 to May 1, as well as any hard ticket concerts in Southern California during that same time period -- because of the Soul’d Out case.

"We are pleased that the court has agreed that Soul’d Out’s complaint was sufficient and that the case can go forward," Harris and Abdulhadi's lawyer, Nika Aldrich said. "We expect that, after complete discovery, a jury will find that Coachella’s radius clause is unreasonable, and that AEG’s use and abuse of that clause to hurt local music festivals was unlawful.”

A representative for Coachella did not respond to a request for comment for this story.