Universal Music Wants the Warehouse Fire Class Action Lawsuit Dismissed

The label says the suit isn't based on "any valid legal theory"
Universal Music Wants the Warehouse Fire Class Action Lawsuit Dismissed
Last month, the estates of Tom Petty and 2Pac, as well as artists such as SoundgardenHole and Steve Earle, filed a class action lawsuit against Universal Music Group after it was reported that a 2008 fire at Universal Studios Hollywood destroyed 500,000 irreplaceable master recordings. Now, the label is looking to get the lawsuit dismissed, saying the complaint isn't based on "any valid legal theory."

According to The Hollywood Reporter, UMG says the damage from the backlot fire that was exposed in a New York Times report was a "heartbreaking loss," but that the label is not obligated to share the settlement it received following the blaze. 

The class action suit accuses Universal Music of negligence when it came to preventing the fire, in addition to concealing the extent of the loss from artists, while also pursuing litigation and insurance claims. The suit seeks damages worth half of insurance claims made by the label valued at $150 million, in addition to half of any additional losses.

"The Complaint includes two breach of contract 'Claims for Relief' but conspicuously avoids reciting any language from the recording agreements that Plaintiffs accuse UMG of breaching," lawyer Scott Edelman wrote in documents viewed by THR. "Those agreements grant UMG ownership of any master recordings and entitle the artists to royalties in specific enumerated circumstances, none of which has been or can be pleaded here. The Complaint does not and cannot plead any facts plausibly showing that UMG breached any provision in any contract."

Edelmen said nothing in the contracts "remotely entitles" artist to a share of the settlement that UMG received, with the label arguing that it would have had to license or authorize use of the master recordings to others and generated revenue from their use for that to happen.

"Because Plaintiffs have failed to plead facts showing that a contractual obligation was breached — and, to the contrary, plead that UMG could not receive revenues implicating these contract provisions after the fire — Plaintiffs' first breach of contract claim must be dismissed," Edelmen wrote.

On the plaintiffs' claims that UMG failed to take preventative measures to secure and protect the master recordings, Edelmen said they are "an amalgamation of claims for bailment and breach of the implied covenant of good faith and fair dealing," arguing the contracts clearly note the label owns the masters and was not obligated to return the property.

"According to the Complaint, the implied covenant requires that 'neither party to the contract will undertake actions to deprive the other party of the expected fruits and benefits of the contractual relationship.' ... Here, the Complaint pleads no facts showing that UMG undertook a conscious and deliberate act to destroy the recordings; and indeed, any such allegation would be implausible, because UMG was deprived of its own property as a result of a fire that it did not start."

UMG also argues the relevant statutes of limitations expired years ago, saying plaintiffs can't explain why they never inquired about missing masters when the label "publicly stated that hundreds of thousands of recordings were destroyed" during 2009 litigation.

In related news, label archivist Pat Kraus sent a memo to employees Wednesday (July 17), updating UMG employees on the status of the investigation. The memo, obtained by The Hollywood Reporter, reads in part:

Over the past several weeks, our team has been working around the clock, fielding requests from approximately 275 artists and representatives...To date we've reviewed 26,663 individual assets covering 30 artists. Of those assets, we believe we've identified 424 that could be missing or lost due to the fire, with audio assets accounting for 349 of them. Our data suggests that 22 of those could be "original masters" which are associated with 5 artists. For each of those lost masters, we have located high-quality alternate sources in the form of safety copies or duplicate masters.

Kraus added those counts "evolve by the hour" and explained his team is working to answer questions from artists and representatives. He noted that UMG won't publicly release the status of any specific artist's masters.

A hearing on the motion to dismiss the lawsuit is currently set for November 4.