MCA Wins Legal Battle Over Distributor’s Losses

An often-bitter, 16-month legal battle between MCA Records and a distributor of budget records ended Tuesday, when a U.S. District Court jury in Los Angeles ruled that MCA was not responsible for losses suffered by Scorpio Music as a result of a 1984 purchase of so-called cutout recordings from MCA.

“We feel it was a just verdict, well supported by the facts,” said Dennis Kinnaird, a lawyer with the firm of Munger, Tolles & Olson, which represented MCA.

John Gervasoni, the owner of Scorpio, could not be reached for comment Tuesday. “We tried,” Scorpio attorney Raphael Chodos said.

New Jersey-based Scorpio originally sued MCA of Los Angeles in March, 1986, claiming that it had been defrauded in a racketeering scheme concocted by MCA Records executives and reputed organized crime figure Salvatore Pisello. Scorpio claimed that the executives had conspired with Pisello and Ranji Bedi, the owner of a small Los Angeles cutout distributorship called Betaco Enterprises, to entice Scorpio into advancing $350,000 in cash for 1.1 million cutouts and then illegally converted the money to their own use. Scorpio claimed that Pisello and Bedi acted as agents of MCA in the 1984 sale.

Scorpio’s suit was filed the day after MCA--in an apparently preemptive move--sued Scorpio for copyright infringement, claiming that the firm had manufactured and sold counterfeit records of such MCA artists as the Who, Jimmy Buffett and Tom Petty and the Heartbreakers.

In March, 1987, after a weeklong trial, U.S. District Court Judge Stephen V. Wilson ruled that Scorpio had not manufactured or sold bogus MCA recordings. By the time the second part of the case began before the jury last Tuesday, Scorpio had agreed to drop the racketeering aspects and limit its arguments to a breach-of-contract dispute. Scorpio was seeking $3.5 million for damages it claims it suffered when MCA and its “apparent agent,” Betaco, delivered only 140,000 of the 1.1 million records Scorpio ordered and refunded only $150,000 of the $350,000 Scorpio had advanced.

In the course of the trial, MCA attorneys acknowledged, however, that Pisello had acted as MCA’s apparent agent in several sales of MCA cutouts in 1984. Those sales are still the focus of a Los Angeles grand jury investigation.