Record Promoter’s Suit Against MCA, Warner Dismissed

In a surprising reversal of an earlier ruling, a federal judge in Los Angeles on Monday dismissed a local record promoter’s $25-million antitrust suit against MCA Records and the Warner Communications record labels.

The lawsuit, filed more than two years ago by independent record promoter Joseph Isgro, charged that MCA, Warner and 10 other major record companies had conspired to boycott Isgro’s services in an effort to reduce the price of independent promotion.

Since the suit was filed, all of the other companies have settled with Isgro out of court, leaving only MCA and Warner defending the suit. In June, U.S. District Judge Consuelo B. Marshall denied a similar motion by MCA and Warner to dismiss Isgro’s suit.

However, during a five-minute hearing Monday, Marshall said that, after reading the arguments again, she decided that her previous ruling was “incorrect” and granted the record companies’ motion to dismiss.

Isgro’s lawyers, Steven Cannata and Lawrence Papale, said they were “stunned” by the judge’s decision. “It was the same motion, word for word, that she already denied,” Cannata said after the hearing. Papale said they would most likely appeal the ruling.

MCA lawyers were jubilant. “Judge Marshall correctly ruled that even if Isgro could prove at trial every claim he made, we still would have won because he wouldn’t have proved an antitrust violation, so there was no point in trying the case,” said Brad Phillips, a lawyer for the firm of Munger, Tolles & Olsen, MCA’s outside counsel. Phillips added that “MCA continues to deny there was conspiracy in the first place.”

At the same hearing Monday, Marshall refused Isgro’s motion to dismiss MCA’s civil racketeering lawsuit against the promoter. Marshall did grant Isgro’s motion to dismiss a similar suit by Warner, saying the company’s complaint was not specific enough. The judge gave Warner lawyers 30 days to amend their complaint.

Filed last April, MCA’s lawsuit charges that Isgro engaged in illegal payola practices in violation of an agreement that he signed with the company.

Once one of the most powerful independent promoters in the country, Isgro has been at the center of a nationwide payola scandal in the record industry since early 1986, when an NBC News telecast portrayed him as being linked to East Coast organized crime figures. Within days of the report, all of the major record company announced that they were suspending the use of independent promoters.

Focus of Probe

Before the suspension, the major record companies were spending an estimated $80 million a year on independent promotion, hiring outside contractors such as Isgro to persuade radio program directors to play their records. Isgro’s antitrust suit charged that the record companies’ actions were aimed at cutting costs rather than eliminating payola, the practice of paying stations for air play.

Isgro denies that he has ever engaged in payola practices or that he is connected in any way to organized crime. Nonetheless, he is currently the focus of a federal grand jury investigation into suspected payola that is being directed by the Los Angeles office of the Justice Department’s Organized Crime Strike Force.

In January, two of Isgro’s former business associates--Ralph Tashjian and Bill Craig--were indicted by the grand jury on a variety of payola and tax evasion charges.

Originally, Isgro’s case against MCA and Warner was set for trial last April. However, the day before the trial was to begin, Strike Force attorneys petitioned Marshall for a three-month delay in the civil case, arguing that it would interfere with the ongoing payola investigation. Marshall reluctantly agreed.