If the case goes to trial, the damages assessed by the jury could set an unofficial but important precedent that could make it either easier or more expensive to leave a recording contract (which would still only be possible after seven years have elapsed). Several prominent music business attorneys say that they're not aware of a case involving damages for unreleased albums that actually went to court.
"As far as I can tell, there has never been a trial to determine damages for undelivered records," says Avenged Sevenfold's attorney in the case, Howard King, a litigator at King, Holmes, Paterno & Soriano. One motive for the settlements: Labels and managers don't want to risk a ruling that could hurt them in the future.
Avenged Sevenfold signed a five-album deal with Warner Bros. in 2003, and "we had a very positive experience, commercially and personally," according to manager Larry Jacobson. The band's first two albums for the label sold more than 1 million units each, and its 2013 release, Hail to the King, has sold 646,000 copies, according to Nielsen Music (see sidebar, below). But some of the executives the band worked with have left the company, and Jacobson says, "The label had so many opportunities to show that they put this band first, and they never did."
The band has since moved on -- to Capitol, which on Oct. 28 issued the group's seventh album, The Stage, as a surprise release, promoted with a concert on top of the Capitol building. (Capitol is not named in the lawsuit, and the band didn't begin discussions with that label until it had left Warner Bros.) On Dec. 2, Warner Bros. released an Avenged Sevenfold compilation, The Best of 2005-2013, which singer M. Shadows has criticized as an effort to undermine the band's new project.
Now King is making the case -- in court and in the media -- that the new Avenged Sevenfold album wouldn't have been worth as much to Warner since, he argues, layoffs have hampered the label's ability to promote rock acts. "This case is about Warner's inability to show damages because they wouldn't have been able to put out a successful album," says King. "The band left because it wasn't the same label."
Like all record companies, Warner Bros. has downsized during the past decade, and its parent company's status as the smallest of the three major-label groups has left it weaker than its rivals in some ways. But Peter Gray, the executive who oversaw Avenged Sevenfold's radio promotion campaigns, is now executive vp of the label. And although the sharp decline in album sales makes a fair comparison difficult, Avenged Sevenfold's new album, The Stage, sold 116,000 copies in its first five weeks of release -- less than half of what the band's previous album did in the same period. Warner Music Group said in a statement that "as this is a pending legal matter, we aren't commenting, except to say we're proud of our partnership with Avenged Sevenfold, including the band's two No. 1s on the Billboard 200 chart."
It's also possible that an Avenged Sevenfold album would have sold a similar amount no matter which label released it. "I would use the numbers it's expected to earn and not get into the perception," says Barry Massarsky of Massarsky Consulting, an economist who often offers expert testimony in copyright cases. Ultimately, that decision may fall to a jury.
A Breakdown of Avenged Sevenfold Album Sales
Copies sold of Avenged Sevenfold's 2005 album City of Evil: 1.3M
Copies sold of the band's 2007 self-titled album: 1.1M
Copies sold of the band's 2010 album Nightmare: 964k
Copies sold of the band's 2013 album Hail to the King: 646K
Copies sold of the band's newest album, The Stage: 116K
This article originally appeared in the Dec. 17 issue of Billboard.