A class action lawsuit against Universal Music Group over the 2008 warehouse fire on the Universal Los Angeles backlot that a New York Times Magazine report last year claimed destroyed up to 500,000 master recordings in the record company’s archive vaults has been dismissed by a federal judge for a second time.
On Monday (March 29), U.S. District Judge John A. Kronstadt tossed out Tom Petty‘s ex-wife Jane Petty‘s amended lawsuit against UMG and barred her from refiling the case. Jane Petty’s amended case against UMG hinged on Tom Petty’s 1984 exclusive artist recording agreement signed with MCA, a predecessor in interest to UMG, and whether that contract required the label to share the insurance settlement funds. UMG had previously argued that Tom Petty’s artist contract only required the company to share money generated when the artist’s works were licensed.
The class action lawsuit was originally filed against UMG on June 21, 2019, by Soundgarden, Hole, Tom Whalley, Steve Earle and Jane Petty, who were seeking to recover half of any settlement proceeds and insurance payments — reportedly valued at $150 million — that UMG received due to the 2008 fire on the Universal Studios backlot in a confidential settlement, according to court papers. The artists were suing UMG for breach of contract, negligence, reckless conduct and misrepresentation, as well as other causes of action claiming that they suffered irreparable losses to their master recordings. But Hole, Soundgarden, Tom Whalley, and Steve Earle all voluntarily dropped out of the litigation when it was demonstrated they suffered no losses due to the fire.
On April 6, U.S. District Judge John Kronstadt dismissed Jane Petty’s lawsuit, ruling she had failed to present enough evidence to the court. She responded by refiling an amended lawsuit against UMG suing them for breach of contract and breach of implied covenant of good faith and fair dealing.
Kronstadt made his second determination to throw out Jane Petty’s case focusing only on the former couple’s marital settlement agreement signed in 1998 and not the provisions in Tom Petty’s contract with MCA. Jane Petty argued in court papers that the marital agreement stated that Tom Petty and she would each own an “undivided one-half (1/2) interest as tenants-in-common of said assets,” and because of that she holds the rights to “enforce 100% of (and to retain 50% of the proceeds of) Tom Petty’s contractual rights related to the master recordings specified in the [Marital Settlement], including some of those at issue in this action.”
It wasn’t until May 18, 2020, however, that UMG learned that marital settlement also contained a “net income and royalty override agreement,” which specified that Tom Petty had the “sole and exclusive right to prosecute, defend and settle any third-party action or claim relating to the Community Works and to prevent and restrain the infringement of copyright or other rights with respect to the Community Works” related to his masters. Jane Petty argued that it was “implied” that she had been granted rights to bring a lawsuit on his behalf.
Kronstadt disagreed. The override agreement, he wrote in his ruling, “cannot be canceled, modified, amended or waived, in part or in full, in any manner except by an instrument in writing signed by the party to be charged or by the Family Law Court Judge.”
He also ruled the provision clearly demonstrated that Jane did not have the authority to sue over an alleged breach of Tom Petty’s MCA contract over his recordings and said that allowing Jane to file another complaint “would be futile.”
“The court today definitively rejected the plaintiffs’ case,” said a UMG spokesperson in a statement to Billboard. “This is the second dismissal of a lawsuit spurred by the inaccurate and misleading reporting of the New York Times. At this point, The New York Times has a responsibility to explain why its editors continue to stand behind a story that has been disproven with incontrovertible evidence from both UMG and many of the artists named in the story.”
Jane Petty’s attorneys did not respond to Billboard‘s request for comment at time of publishing.