Lorrie Morgan, the widow of late country artist Keith Whitley, and their children, have filed suit against Sony Music Entertainment, claiming that the major label has underpaid Whitley royalties by $1 million.

Most of the underpaid royalties appear to be related to bonus payments when the albums reach certain sales plateaus. But in a "me too" move, Morgan and her children are mimicking F.B.T. Productions, which successfully sued Universal Music over Eminem royalties, claiming that downloads are a licensed transaction and as such should be paid 50% instead of the normal artist royalty rate for physical goods. In the case of Whitley, that rate is 8%, according to court documents.

Instead, "Sony unilaterally and greedily chooses to pay royalties ... as though they were sales through normal retail channel, a defined term that applies only to the sale of physical [music] through conventional record stores, thereby pocketing hundreds of thousands of dollars that rightfully belong to Mr. Whitley's widow and children," according to the lawsuit, which was filed with the New York State Supreme Court in Manhattan on Oct 8.

During his five-year career, Whitley released two albums and an EP, while RCA released a posthumously third album just one month after his death in 1989. Since then, RCA/Sony has released no fewer than 13 additional albums, including re-releases and greatest hits.

The recording agreement expressly provides that RCA is limited to the release of up to six albums, the lawsuit states, and Whitley never contracted for albums seven through 15. Instead of paying royalties due the plaintiff, Sony "continues to capitalize on the tragic death of Keith Whitley by continuing to release LPs far outside the realm on the recording agreement," the filing states.

While Whitley's royalty rate is set at 8% of suggested list price, the contract called for an escalated base of plus three percentage points, or 11% in total, if the first three albums sold over 400,000 units and a plus four, or 12% when album numbers four through seven exceeded 500,000 units, with the higher rates retroactive on all sales.

Sony has refused to pay the escalated rate on albums numbers two through four and number seven, the suit states. Nielsen Soundscan shows that Whitley's albums have sold 3.6 million units in the United States since 1991, while track downloads total 766,000 units.

"Sony seems to think, however, that its end of the bargain need not be fulfilled now that Mr. Whitley has passed on," the lawsuit states. "The story is, regretfully, a familiar one: a record label that refuses to honor its contractual commitments to pay proper royalties to an artist (or in this case, the artist's heirs) despite productive and profitable posthumous exploitation of the artist and his work."

A Sony Music spokesman declined comment.

In an unrelated development, the San Francisco court yesterday (Oct. 21) denied a Universal Music Group appeal to rehear the case, after an appeal court vacated a jury's verdict in favor of the label's position on royalties. Major record labels, including Universal, pay download sales the same way they pay CD royalties as the usual artist rate, which is usually 12-20% of list price, as opposed to the 50% rate that licensing revenues command, which is what the court ruling means for Eminem's digital sales, unless the major appeals.

A Universal Music Group spokesman declined to comment on the latest turn of events.

"The denial of rehearing is effectively the last word from the Ninth Circuit," said Howard Rice's Daniel Asimow, appellate counsel for F.B.T. Productions. "We are very pleased with the Court's decision as it vindicates our position that the agreements between record labels and iTunes and other digital music services are licenses, and record companies have to pay Eminem and F.B.T under the royalty provisions governing licenses of their products."