Metallica Sues Label, Challenging ‘7-Year’ Contract Statute

In a move that could upend performers’ contracts throughout the recording industry, Metallica, one of the nation’s biggest-selling hard-rock groups, sued Time Warner’s Elektra Entertainment on Tuesday to end its decade-long association with the Elektra label.

The Grammy-winning group, which has sold an estimated 40 million albums worldwide for Elektra since 1984, is basing its claim on a controversial California law designed to free actors from long-term studio deals. The law is untested in the music business.

Under the so-called seven-year statute, entertainers cannot be tied to any company for more than seven years. Some record companies say the statute does not apply to recording acts but that they have been reluctant to test it for fear of an exodus of veteran artists. If the lawsuit succeeds, recording artists could attain, every seven years, a free-agency status similar to that of professional athletes.

Previous threatened showdowns over the statute--including recent cases filed by singers Don Henley and Luther Vandross against Geffen Records and Epic Records, respectively--were avoided when artists settled out of court.

“A win for Metallica could have a dramatic impact on the music business,” said entertainment lawyer Don Engel, who represented Henley and Vandross in their seven-year-statute battles. “Record companies have been trying to brush this issue under the rug for decades. If Metallica wins, you can bet other performers who are unhappy with their contracts will follow their lead.”

Metallica’s dispute follows a Warner Music corporate shake-up that was orchestrated by Warner Music Group Chairman Robert Morgado in August. The revamp led to the resignation of Robert Krasnow as chairman of Elektra Entertainment and the announcement by Mo Ostin, longtime chairman of Warner Bros. Records, that he would resign Jan. 1.

Warner Music Group, the world’s largest recording company, is a unit of Time Warner.

Metallica drummer Lars Ulrich said the band’s lawsuit was prompted by what he called “greedy and arrogant” behavior by Morgado, who Ulrich says reneged on a promise by Krasnow to restructure the band’s deal.

“Our faith in this company has been flushed down the drain,” Ulrich said. “Elektra used to have a reputation as a label that treated artists with respect. Now it’s just another place where arrogant business people break promises.”

A spokeswoman for Warner Music Group said the company had not seen the suit, which was filed in San Francisco County Superior Court, and declined to comment. Calls to Elektra were not returned, and Morgado was not available for comment.

Ulrich said Krasnow promised last spring to restructure the band’s 10-year-old contract into a joint venture in which the band and the label would in effect become partners. In seeking the deal, the band waived personal advances in favor of a profit-sharing arrangement.