A class-action lawsuit seeking at least $100 million in damages was filed Friday against Universal Music Group on behalf of artists including rock bands Soundgarden and Hole, the estate of rapper Tupac Shakur, rocker Tom Petty’s ex-wife and country-rock singer-songwriter Steve Earle over a 2008 fire in Los Angeles in which master recordings made by those artists are alleged to have been destroyed.
It’s the first legal action taken since news surfaced last week of the extent of damage from the June 1, 2008, blaze that decimated a storage facility on the lot at Universal Studios Hollywood that housed a trove of recordings in UMG’s possession.
The suit, filed in U.S. Central District Court in Los Angeles by three law firms, states that Universal Music owes their clients, and others still to be identified, half of a confidential settlement UMG negotiated with its sister company, Universal Studios, estimated in the court papers to be worth at least $150 million.
Representatives for Universal Music Group could not be reached for comment.
The action also argues that artists are contractually entitled to 50% of an additional insurance settlement UMG is said to have received for losses sustained in the fire — losses the lawsuit argues were intentionally withheld from the music community, as well as from the public.
“Yet,” the complaint charges, “even as it kept plaintiffs in the dark and misrepresented the extent of the losses, UMG successfully pursued litigation and insurance claims it was recently reported to have valued at $150 million to recoup the value of the master records.
“UMG concealed its massive recovery from plaintiffs, apparently hoping it could keep it all to itself by burying the truth in sealed court filings and a confidential settlement agreement,” the suit states. “Most importantly, UMG did not share any of its recovery with plaintiffs, the artists whose life works were destroyed in the fire — even though, by the terms of their recording contracts, plaintiffs are entitled to 50% of those proceeds and payments.”
Precisely how many recordings were destroyed and which artists and titles were impacted has never been detailed to the public, but Friday’s lawsuit alleges that “UMG, in fact, claims to have created what it internally called a ‘God List’ that purports to identify with ‘reasonable certainty’ an inventory of all Master Recordings destroyed in the Fire.”
An investigation published June 11 by the New York Times Magazine estimated that as many as 500,000 recordings were destroyed and that a partial list of artists whose works were among those reduced to ashes includes Louis Armstrong, Billie Holiday, Bing Crosby, Judy Garland, Chuck Berry, Buddy Holly, Tom Petty & the Heartbreakers, Nirvana, Duke Ellington, John Coltrane and Count Basie.
Historic individual recordings listed among those destroyed in that report include Bill Haley & His Comets’ “Rock Around the Clock,” the Kingsmen’s “Louie Louie,” Etta James’ “At Last,” Curtis Mayfield & the Impressions’ “People Get Ready,” Jackie Brenston and His Delta Cats’ “Rocket 88” and Bo Diddley’s “Bo Diddley/I’m a Man.”
UMG quickly took issue with the report, citing, “numerous inaccuracies, misleading statements, contradictions and fundamental misunderstandings of the scope of the incident and affected assets” in a statement issued last week.
The suit, filed jointly by King, Holmes, Paterno & Soriano, McPherson LLP and Susman Godfrey, all Los Angeles-based firms, alleges that UMG did not take “all reasonable steps to make sure [master recordings] are not damaged, abused, destroyed, wasted, lost or stolen” and “it did not ‘speak up immediately [when it saw] abuse or misuse’ of assets.”
The complaint describes the Universal Studios vault that housed the recordings as “an inadequate, substandard storage warehouse … that was a known firetrap.”
“Immediately after the fire,” according to the court filing, “UMG embarked on a systematic and fraudulent scheme of misrepresentation and misdirection designed to conceal the loss of the master recordings destroyed in the fire.”
The filing then quotes from contemporaneous reports in the Los Angeles Times, Billboard, the New York Daily News and New York Times in which representatives for Universal Music downplayed the severity of the damage.
“At this point, it appears that the fire consumed no irreplaceable master recordings, just copies,” a 2008 L.A. Times editorial stated. “The studio and the record company both are fortunate enough to have the resources to preserve multiple copies of their source materials around the country. They’ve also been duplicating their recordings in high-quality digital formats, creating additional backups in the event the originals are lost.”
“To this day,” the complaint states, “UMG has not informed Plaintiffs that any Master Recordings embodying musical works owned by them were destroyed in the fire, and has refused to disclose or account to Plaintiffs for settlement proceeds and insurance payments received by UMG for the loss of the Master Recordings.”
Earlier this week, UMG CEO Lucian Grainge instructed his worldwide staff to cooperate fully with any artists seeking information on the status of particular master recordings. In an internal memo, a copy of which was obtained by The Times, Grainge told employees to direct artists’ inquiries to the company’s senior vice president of recording studios and archive management, Pat Kraus.
Grainge’s message also stressed that “We owe our artists transparency. We owe them answers. I will ensure that the senior management of this company, starting with me, owns this.”
The fire took place under a previous UMG administration when Doug Morris was still chairman and chief executive of the world’s largest music conglomerate.
Earlier this week, the head of Universal Music’s parent company, France-based Vivendi SA, dismissed the New York Times report as “noise” at a time when Vivendi is seeking to sell off 50% of UMG to help finance other acquisitions. Various estimates in recent months have placed the value of UMG between $25 billion and $50 billion.
“It’s a credit to the leadership of Lucian Grainge,” Vivendi CEO Arnaud de Puyfontaine told Variety this week, praising Grainge’s handling of the news. “It happened 11 years ago and [recent] headlines are just noise.”
Howard King, principal in King, Holmes, Paterno & Soriano, one of the firms that filed the class action suit on Friday, shot back that “the likelihood that their life’s works may have been destroyed by the gross negligence of Universal Music is far from ‘just noise’ to any potentially affected artist.
“It wasn’t ‘just noise’ in 2009 when Universal Music sued NBC Universal, claiming that hundreds of thousands of irreplaceable masters had been lost in the devastating fire. It wasn’t ‘just noise’ when Universal Music collected tens of millions of dollars, or more, in compensation for the lost masters.
“I believe that Mr. de Puyfontaine wishes this would all disappear and not interfere with his financial planning,” King said. “This wish will not come true.”
Among the plaintiffs are former record executive Tom Whalley — a trustee of the Afeni Shakur Trust established after the 1996 shooting death of Tupac Shakur — and Tom Petty’s first wife, Jane Petty, over her interest in specific Petty recordings in which she was assigned half interest in the masters for his albums “Damn the Torpedoes, “Full Moon Fever” and “Southern Accents,” believed to have been destroyed in the fire.
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