brown et al v. goldstein - war complaint.pdf
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8/11/2019 Brown et al v. Goldstein - WAR complaint.pdf
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Kenneth D. Freundlich (SBN: 119806)
Michael J. Kaiser (SBN: 258717)
FREUNDLICH
LAW
16133
Ventura
Blvd.
Suite
1270
Encino.CA
91436
P: (310)275-5350
P: (818)377-3790
F: (310)275-5351
E-Mail: [email protected]
MaxJ.Sprecher(SBN:
169285)
LAW OFFICES
OF MAX J. SPRECHER
5850Canoga Avenue, 4th Floor
Woodland Hills , CA 91367
P: 818.996.2255
F:
818.996.4204
E-Mail: [email protected]
Attorneys for Plaintiffs
Harold Brown, Lee
Oskar
Levitin,
Howard
Scott, Morris Dickerson, Jr.
as Conservatorof the Estate
of
Morris Dewayne ( BB ) Dickerson,
LaurianMiller on her own behalf and as assignee
o f th e Heirs
o f
Char les
Miller
SUPERIOR COURT OF
THE STATE
OF
CALIFORNIA
COUNTY OF LOS ANGELES, CENTRAL DISTRICT
FILED
>rCourt of G
bounty of Los Angeles
OCT
0 3
2014
Superior Court of Californfe
o
Sherri fl. Caj
By.
Offiar/Cler
Dijxity
m
HAROLD BROWN, an individual;
LEE OSKAR
LEVITIN, an individual; HOWARD
SCOTT,
an
individual; MORRIS
DICKERSON,
JR. as
Conservator o f the Estate of MORRIS DEWAYNE
( BB ) DICKERSON, an individual; and
LAURIAN MILLER, on behalf
of
herself and as
assignee
of
the claims of the Heirs
of
Charles
Miller,
Plaintiffs,
Case No.
BC559691
Related cases assigned to
the
Hon. William F. Fahey,
Dept. 69: BC371227 (Lead),
BC423291 and BC457391
COMPLAINT
FOR:
v s
GERALD GOLDSTEIN,
an individual:
FAR OUT
MUSIC, INC., a California corporation; FAR OUT
PRODUCTIONS, INC., a California corporation;
FAR OUT MANAGEMENT, LTD., a California
corporation; JERRY GOLDSTEIN MUSIC, INC., a
California corporation; TMC MUSIC, INC., a
California corporation; AUDIO VISUAL
ENTERTAINMENT, INC., a California
corporation dba AVENUE RECORDS; FAR OUT
HOLDING CORP., a Delaware corporation; and
DOES 1 through 20,
Defendan ts .
I
COMPLAINT
DECLARATORY
RELIEF;
BREACH
OF CONTRACT
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Plaintiffs Harold Brown ( Brown ), Lee Oskar Levitin ( Levitin ), Howard Scott ( Scott ),
Morris Dickerson, Jr. asConservator of theEstateof Morris( BB )Dickerson ( Dickerson ),
and Laurian Miller ( L. Miller ) on her own behalfand as assignee
of
the Heirs
of
Charles Miller
(collectively, Plaintiffs ) hereby complain and allege as follows.
I.
INTRODUCT ION
1. Plaintiffs Brown, Levitin, Scott, and Dickerson, in one settlement agreement, and
PlaintiffMiller in a second settlementagreement, resolvedprotracted litigationagainst the
Defendants by twowritten settlementagreements, bothof which,
inter alia,
requiredDefendant
TMC Music, Inc., with respect to Plaintiffs' musical compositions, and Defendant Far Out
Productions, Inc. with respect to Plaintiffs' sound recordings, to account to Plaintiffs semi-annually
for royaltiesearned from the exploitation of Plaintiffs' musical compositions and recordings under
agreed formulae, and to providePlaintiffswith audit rights to test the validityof these accountings
and payments.
2. The settlementagreementseach providedforaccounting withrespect to the Musical
Compositions in accordancewith the termsof the 1972 Songwriters' Agreementas modified by
the 1975 Memorandum (the 1975Amendment ). Theparties agreedthat [A]nydisputesand
disagreements concerning the interpretation
of
the 1975Amendment, and the application
of
the
1975 Amendment in this Agreementshall be resolved by litigation beforea Judge of the Los
Angeles Superior Court.
3. Plaintiffs allege that Defendants have applied an incorrect formula to the calculation
of royalties arising fromtheexploitation of musicalcompositions under thesettlementagreements
in misconstruing the 1975Amendment throughout the entire post-settlement period, as well as
abruptly changingthe revenuebase on which Defendants computed the paymentsdue to Plaintiffs
incontravention of thesettlementagreements, the underlying agreements setting forth the
formulae, andDefendantsown40 year course
of
dealing.
II THE PART IES
4. PlaintiffBrown isan individual, currently residing in Los AngelesCounty,
California.
COMPLAINT
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5.
Plaintiff Dickerson is an individual
and
a resident ofLos
Angeles
County,
California. Morris Dickerson, Jr. was appointed
Conservator
in the Los Angeles Superior Court on
or about September 19, 2014, inCase No. BPI53826.
6. Plaintiff
Levitin
is
an
individual
and
a
resident
of
Redmond, Washington.
7. PlaintiffScott is
an
individual and a
resident
ofArlington, Texas.
8.
Plaintiff
L.
Miller
is
an
individual and
a resident of
Los
Angeles
County,
California.
Miller
is a surviving
daughter
ofCharles
Miller
( Miller ) whose other survivors include his wife,
Eddy Miller ( E.
Miler ),
two sons, Donald Miller
( D.
Miller') and
Mark Miller
( M. Miller ),
and a second daughter Annette Miller ( A. Miller ). Miller died in
June
1980,
intestate,
and
his
interests
in
the
subject matter
of
this
lawsuit
where
collectively inherited
by
E.
Miller,
D.
Miller,
M.
Miller, L. Miller and
A.
Miller
(collectively,
the
MillerHeirs ).
Thereafter all of the surviving
Millers assigned all of their inherited rights in, inter alia, the subject matter of
BC457391
and this
lawsuit, to L. Miller and appointed L. Miller to represent their interests in the subject matter of this
lawsuit.
It is on her
own
behalf and
as
assignee
and
representative
of
Millers
surviving
family,
that L. Miller is the Plaintiff.
9. Plaintiffs Brown,
Dickerson,
Levitin,
Scott, along
with Miller and LeRoy Lonnie
Jordan
and Papa Dee
Allen (deceased)
are
the founding, original members
of
the
1970s musical
performing
and
recording
group WAR
(the
Original War J
and the songwriters, recording
artists,
and original perfonners of legendary musical hits, including
Why
Can t We Be Friends?,
The
World
Is a
Ghetto Cisco
Kid.
and Low
Rider.
The
Original War,
which included
Plaintiffs, LeRoy
Lonnie
Jordan,
andtwoothermembers whoare deceased, wroteand recordedmusical
compositions
that
have
sold
tens
of
millions
of
records worldwide, was nominated for
several
23 IGrammy awards, and, in2009,
was
nominated for
entrance
into the Rock and Roll Hall of Fame.
24
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various
times relevant
to
this action,
each
of
Plaintiffs
was
a
resident
of
Los
Angeles
County, and/or the relevant
contracts
were entered into
in
Los
Angeles County orwith
other residents of
Los
Angeles
County,
and/or
operative
events
occurred in
Los Angeles County.
11. Defendant Gerald ( Jerry ) Goldstein ( Goldstein )
isan
individual. Plaintiffs
are
informed and believe and
based thereon
allege
that
Goldstein
is a
resident
ofLos
Angeles County.
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12. Plaintiffs
are informed
and believe and based thereon allege
that
Defendant Far Out
Productions,
Inc.
( Far
Out
Productions
or
FOP )
is a
California
corporation
with
its principal
offices
located
in
Los Angeles County.
Plaintiffs
are further informed and
believe
and
based
thereon
allege
that Far Out Productions
is
arecord label, i.e.
in
the business ofowning and
exploitingmusical recordings.
13.
Plaintiffs
are
informed and
believe and based
thereon allege
that Defendant
FarOut
Music,
Inc.
( Far
Out
Music ) is aCalifornia corporation with
its
principal
offices
located in Los
Angeles
County.
Plaintiffs are further informed
and
believe and based thereon
allege that Far
Out
Music is in the business
ofmusic
publishing, i.e., exploiting musical compositions. Plaintiffs are
informed
and
believe
that
Far
Out Music s
corporate
status
has
been
suspended
by
the
California
Secretary
of
State and Franchise Tax Board.
14. Plaintiffs are
informed and
believe and based
thereon
allege that Defendant TMC
Music, Inc. ( TMC ) is aCalifornia
corporation
widi its principal
offices located in
Los
Angeles
County.
Plaintiffs are further
informed
and believe and based thereon
allege
that TMC is
in
the
business of
music
publishing
and is (or claims to
be)
asuccessor-in-interest to
some
or all ofFar
Out
Music's rights
and
interests as they
pertain
to Plaintiffs.
Plaintiffs
are informed and
believe
that
TMC's
corporate status has
been
suspended
by the
California Franchise
Tax Board.
15. Plaintiffs are informed
and
believe and based thereon allege
that
Defendant Far
Out
Management, Ltd.
( Far Out Management )
is
aCalifornia corporation with its principal
offices
located
in
Los Angeles County.
Plaintiffs are further informed and
believe and based
thereon
allege
that Far
Out
Management is an artist management
company.
Plaintiffs are informed
and
believe that
Far
Out Management s corporate status has been
suspended
by die California Franchise
Tax
Board.
16.
Plaintiffs
are informed
and
believe
and
based
thereon
allege
that Defendant
Jerry
Goldstein
Music,
Inc. ( Jerry Goldstein Music ) is aCalifornia corporation
with
its principal
offices located in Los Angeles County. Plaintiffs are further informed and believe and based
thereon
allege that Jerry Goldstein Music purports to be a
record label
and
music publisher.
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17. Plaintiffs are informed andbelieve andbased
thereon
allegethat Defendant Audio
Visual
Entertainment, Inc.
(dba Avenue
Records) ( Avenue ) is a
California
corporation
with
its
principal offices located in Los Angeles
County.
Plaintiffs are further informed andbelieve and
based thereon allege
that
Avenue purports to be a record label and is (or claims to be orpreviously
claimed to be)
a successor-in-interest
to
some or
all
of
Far Out
Productions'
(or
Jerry
Goldstein
Music's) rights
and interests as theypertain to Plaintiffs.
18.
Plaintiffs are
informed and believe and
based
thereon allege that
Defendant
Far
Out
Holding Corporation ( Far Out Holdings ) is aDelaware
corporation
with its principal offices
located
inLos
Angeles County.
Plaintiffs are further informed andbelieve and
based thereon
allege
that Far Out Holdings
is
a
shell
through
which Goldstein owns, manages, and/or controls
the
other corporate Defendants.
19.
Goldstein, Far
Out Productions, TMC,
Far
Out Music, Far
Out Management,
Jerry
Goldstein Music, Avenue, andFarOutHoldings are hereinafter referred to as to theGoldstein
Defendants.
20. Plaintiffs are informed and believe and based
thereon allege that
there
isa
substantial unity of interest between and among Goldstein Defendants in that, among other reasons,
Goldstein is a substantial shareholder of eachof dieentitiesand/orGoldstein is a substantial
shareholder in an entitywhich, in turn, ownsone of theother GoldsteinDefendants. Plaintiffs are
further informed and believe
and
based
thereon
allege
that Goldstein
exercises
complete control
over and
dominates
each of
the
Goldstein Defendants
in
all substantive
matters,
including, but not
limited to, the hiring of
its officers, the
ultimate
authority
to
enter into contracts, the
ultimate
authority concerning the
direction
and strategy of
litigation,
and the
control over
thedistribution
and
disbursement ofassets. Plaintiffs are further informed
and
believe and based
thereon
allege
thatGoldstein holdshimselfout as theequivalent of eachof theGoldsteinDefendants.
21 Plaintiffs
are
informed and believes and based
thereon
allege that Goldstein exerts,
andat all times relevant heretohas exerted, such dominion andcontrol over theGoldstein
Defendants,
and
so combined the business and operations
of
the Goldstein Defendants, individually
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and collectively, that the Goldstein Defendants are alter
egos of
each other in
relation
to the matters
alleged herein and in all matters of business.
22.
Plaintiffs
are further
infonned
and
believe and
based
thereon allege
that
there exists,
and
at
all times herein mentioned there existed, aunity of
interest
and ownership between the
Goldstein
Defendants, such that
any individuality or separateness between
the Goldstein
Defendants, ceased and that they should
all
be considered the alter egos
ofeach
other.
23.
Plaintiffs are
informed and believe
and
thereon allege that adherence to the
fiction
of
the separate existence
of
the
Goldstein Defendants would
sanction fraud, permit an abuse
of
the
corporate
privilege, and would
promote
injustice,
and
unless judgment
in
this
action includes all of
the
Goldstein Defendants
named
herein, Plaintiffs
may
not
be able
to
enforce
the
claims
and
rights
referred
to
herein and obtain
satisfaction
of
judgment.
24. The
true
names and capacities, whether individual, corporate,
associate,
or
otherwise, ofDefendants named in this Complaint as
Does
I
through
20, inclusive,
are
unknown to
Plaintiffs. As aresult, Plaintiff has
sued these
Defendants
by using
fictitious
names.
Plaintiffwill
amend this
Complaint
to allege these Defendants true names and capacities
once
they have been
ascertained.
25.
Plaintiff
is
infonned
and
believes
and on
that basis alleges that each
of
the
Defendants named in this Complaint as aDoe is
responsible
in some
manner
for the
events,
happenings, acts, and omissions alleged
in
this Complaint,
has
damaged
Plaintiff,
and, therefore,
is
responsible or
liable
to Plaintiff for
the
damages that each has caused.
IIL General Background Facts - The Settlement*
26.
Brown, Dickerson, Levitin,
Scott, and Miller
(Plaintiff
L. Miller s
father)
are five
of
the
founding, original members of
the
1970s musical performing and recording group W R (the
Original War ; and
the
songwriters, recording artists, and
original
performers
of
legendary
musical hits,
including
Why
Can t
We Be Friends?
The
World
Is
aGhetto Cisco
Kid and Low
Rider. The Original War, which also LeRoy Lonnie Jordan
( Jordan ),
and two
other
members
who are
deceased, wrote and recorded musical compositions that have sold tens
of
millions
of
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records worldwide,
was nominated
for
several
Grammy awards,
and, in 2009,
was nominated for
entrance into the Rock and RollHallof Fame.
27. During
the 1970s, Brown,
Dickerson, Levitin, Scott,
and Miller
entered into
a
series
of written agreements with
the
Goldstein Defendants concerning
Plaintiffs
composing and
recording
services
as
members
ofthe Original War.
28. In
2009, Brown, Levitin, Dickerson and Scott filed
an action
in
the
Los
Angeles
Superior Court
(BC423291
- the
Brown
Action ) seeking
redress for decades of
malfeasance
by
the Goldstein Defendants
in
reporting
and
paying Plaintiffs
in connection with the
various
agreements
that
existed prior to that date. On October 13, 2010, each
of
the
Defendants
in the
above-captioned action executed
the
written settlement agreement resolving
the
Brown Action on
the terms and conditions set
forth
therein (the
Brown Settlement Agreement ).
Attached
hereto
as
Exhibit
1
and incorporated herein by this
reference
is
a
true and
correct
copy of the Brown
Settlement Agreement (without the stipulated judgment exhibit).
29. On March 15, 20II, approximately 5months after the Brown Settlement Agreement
was concluded in the above-captioned action, Plaintiff L. Miller filed acompanion action in the
Los
Angeles
Superior
Court
BC457391 - the
Miller Action )
as the
designated
representative
of
the
heirs
of
Miller.
On
December
1,
2011, the
parties
in
the
Miller Action
reached
a
settlement on
the
identical overall terms and conditions set forth in the Brown
Settlement
Agreement
(the
only
real
difference
being
the
total Settlement
Amount
and that the initial accounting to
the
Miller
Plaintiffwould start one
period
behind the accountings to the Plaintiffs
in
the
Brown
Action).1
Attached hereto as Exhibit2and
incorporated
herein
by
this reference is a
true
and
correct
copy of
the
Miller
Settlement
Agreement from
the
Miller action
without
the stipulated
judgment exhibit).
The Brown Settlement Agreement and the Miller Settlement Agreement are
individually and
collectively,
the
Settlement
Agreements.
paragraphs
in
the
Miller Settlement
Agreement
Exhibit
2 . corresponding
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30. The Settlement
Agreements
provided, inter
alia,
that with respect to the Musical
Compositions (as
defined
therein), royalties
shall
be accounted
forand
paid
by
TMC
to
Plaintiffs
in
accordance
with the terms of
the
1972
Songwriters' Agreement
asmodified by the 1975 .
Memorandum
(the
'1975 Agreement') . Exhibit
I,
ft5A.(i).
The Songwriters'
Agreement
and the
1975
Memorandum
are
attached
tothe
settlement
agreements and incorporated by reference
therein, and trueand correct
copies thereof,
arealsoattached to this
Complaint
as Exhibits 3and4,
and incorporated herein by this reference. (To
the
extent separate agreements were executed
by
the
individual artists, Plaintiffs are informed and believe that all
of
the artists executed identical
agreements and theattachedcopiesare trueand accurate copiesof thedocuments each of the
original artists executed.)
31. The
Settlement Agreements
set forth various obligations, including (a)certain
periodic (semi-annual)
fixed payments (the Settlement
Payments )
which are not presently
at
issue
in
this action
[e.g.,
Exhibit 1, f 1], and (b) ongoing accounting and payment
obligations
pursuant to detailed provisions of the Settlement
Agreement
and the underlying
pre-existing
songwriter/music publishing agreements
(as
to the exploitation
of the
musical compositions)
and
master
recording agreements (as
to
the
exploitation
of the
sound recordings) (the Ongoing
Accounting Obligations ) [e.g.,Exhibit 1,ffl5-6].
32. Asthe
Settlement Agreements
specifically
recognized [Exhibit 1,1[5A(i)],
at the
time the Settlement Agreements
were
executed,
the
parties could
not
agree what formula
resulted
20 J
from the
application
of
the 1972 Songwriters Agreement
as
modified
by
the 1975 Memorandum
21
i (the 1975 Amendment ), (i.e., the meaning of the 1975 Amendment ). The Parties further
agreed dial [a]ny disputes and disagreements concerning the interpretation of the
1975
Amendment, and the application
of
the
1975
Amendment
in this Agreement, shall be
resolved, by
litigation before a Judgeof theLosAngeles SuperiorCourt.
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IV- Defendants Required Accountings and Payments To Plaintiffs Relating to the
Writer s and the Partiripants/Co-PublisherV Share of Musical Composition
Revenues
A. usicPublishing Revenues and Royalties
33. Music publishing/songwriters'
revenues consist
mainly offour
categories
of
royalty
income: (1) mechanical royalties which generally are based on record sales; (2) licenses for
synchronization
royalties
(or
fees)
which
are
based on music
synchronized
with visual images
such as a
motion picture, television
program
or commercial; (3) song book and
folio
royalties
which are
derived
from
the sale ofsheet music folios and other
printed
editions;
and (4)
public
performance
royalties
which are
derived
from,
the
broadcasting
of
the
songs over public
airwaves (such as radio, television
and
cable),
streaming over the Internet, live orrecorded uses
nightclubs, restaurants, concerts halls and
other
similar venues, and other public performances.
Collectively, the Music Composition
Royalty
Categories .
34.
It
is longstanding industry custom and
practice (including without
limitation the
performance
societies
agreements between
writer
members and
publisher
members), in which
Defendants
have
engaged in
for
the life of
their
relationship with the Plaintiffs, that music
publishing
revenue
is
divided
into
two
equal
parts:
the
writer's share and
the
publisher's
share .
35.
Consistent with the foregoing practice,
with the
exception of
the publicperformance
royalties, publishers,
including,
on information and belief, Defendant TMC, collect one hundred
percent
(100%)
of
royalties earned
for the Music Composition Royalty Categories
which
include
both thewriters'
share
and thepublishers' shareof such
income.
36.
Also
consistent with
the
foregoing historical practice,
publishers,
including, on
information
and belief,
Defendant
TMC,
received
(and
continues
to receive) directly from its
performing
rights
society (which
Plaintiffs understand
is
ASCAP) fifty
percent
(50%)
of
the
public
performance royalties which represents solely the publisher's
share
of such royalties is paid
directly to the publishers.
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B The
Wri t e r s Share -1972
37. The 1972Songwriters'Agreement (with or without themodifications providedby
the 1975 Amendment), providedthe
formula
forDefendants to accountand payPlaintiffs' royalties
for theirwriters shares
(1J7
of the 1972
Agreement),
and, inaddition, a separate
formula
for
Defendants to alsopayto Plaintiffs a
share
of the publishers share of the
music
publishing
revenue which represented Plaintiffs' so-called participant's or co-publisher's shares (f22 of
the 1972 Agreement).
38. As to the Writer'sShare. pursuant to paragraphs 7(c) and 7(e)Defendants agreed
to pay to Plaintiffs, pro rata,- as writers - their proportional interest in fifty percent(50%)of
the net sums actually received by the[Defendant] Publisher forall rights. These obligations
simplymaintained and continued the
Defendants
earlierobligations arisingundertheoriginal 1970
songwriting agreements thatwere
replaced
by the
1972
Songwriters' Agreement.
39. Because, as set forth
above,
Plaintiffs received theirwriters' shareof public
performance
income
directly
from ASCAP,
bothparagraphs 7(c)and7(e)make it clear that net
sums payable to Plaintiffs for theirwriters' sharewouldexclude Defendants shareof thepublic
performance income it received fromASCAP.Paragraph 7(f) made that writers' share exclusion
clear that with respect towriters' shares: Thepublisher shallnotbe required topayroyalties
earnerby reason of thepublicperfonnance of thecompositions; saidroyalties being payable only
by the performancerightssocietywithwhichWriter is or may in the future becomeaffiliated.
40. Subject toaudit, there isno present dispute as toDefendants' handling of the
payment
of
the writers' share of royalties to Plaintiffs.
C.
The Participant/Co-Publisher
Share Formula -
1972
41.
Paragraph
22 of the 1972 Songwriters'
Agreement
reflected a completely new
obligation thatdid
not
previously
exist
between
the
parties,
and
provides,
inpertinent
part,
as
fotlows (emphasis added):
In
addition
to theroyalties provided in Paragraph 7 above, all
monies
actually earned and received
from the sale, lease, license,
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43.
However, there were two
keychanges to ^22 of the
1972
Songwriters'
Agreement,
the first of which changed AdministrationFee (J22(a)) as follows:
2(d). Pursuant to Paragraph 22 Publisher shall be entitled first to
deduct thesumof twenty-five (25%) percent from theComposition
Gross Receipts in consideration of its services and also from the
direct feesof a trusteeor collecting agent for the licensingof
recordings ofCompositions and legaland accounting fees relating to
theCompositions including thosearisingout of any claimof
copyright infringement brought by or against the Publisher. All other
directcosts
relating
Co theCompositions suchas copyright, printing,
engraving, advertising, promotion andexploiting theCompositions
shall be bornesolely by Publisher.
44. The secondchangemodifiedPlaintiffs' Net Participant's Payment as follows:
2(e). Pursuant to Paragraph 22(d).
..
one hundred (100%) percent
of the
balance
of Compositions
Gross
Receipts remaining after the
deductions set forth in subparagraph (2](d) [of the 1975
Amendment], shall belong to
Writer...
45. Nothing indie 1975Memorandummodified the categories of revenue to which the
modified fomtula applied.
46. The net
effect
ofthe 1975
Amendment
is thatwithrespect to Plaintiffs participation
in the publisher's share of revenues, the formula shouldbe as follows:
In addition to the
songwriter royalties
provided forinparagraph 7 of the
1972Songwriter's Agreement which
remain
unchanged, all moniesearned
and received from thesale, lease, license, dispositionor other turning to
accountof rights in theCompositions, includingall moniesreceived from all
sources including in connectionwith the infringementby third parties of
rightsin theCompositions and thepublisher's shareof public performance
royalties ( Composition Gross Receipts ),shall be treatedas follows:
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(a) Publishershall be entitled first to deduct twenty-five percent
(25 ) from theComposition Gross Receipts in consideration
of
its services
and also the direct fees
of
a trustee or collective for the licensing
of
recordings (such fees not to exceed the standard Harry Fox fees) and actual
legal and accounting fees relating to the Compositions including those
arising out ofany claim
of
copyright infringement brought by or against the
Publisher. All other direct costs relating to the Compositions such as
copyright, printing, engraving, advertising, promoting and exploiting the
Compositions shall be bome solely by Publisher;
(b) Publisher shall then deduct from Composition Gross Receipts
and pay therefrom the royalties due to the compositions
of
theCompositions
in accordance with any agreement Publisher may have with such composers
(including without limitation, paragraph 7 of the 1972 Songwriters'
Agreements);
(c) No further deductions.
(d) 100% of the balance of the Composition Gross Receipts
remaining after the deductions set forth in paragraphs 22(a) and (b), above,
shall belong to Plaintiffs on a pro rata basis.
47. Plaintiffs are informedand believe and thereon allege that for all post-settlement
accounting periods, Defendants have incorrectly accounted to Plaintiffs for Plaintiffs' share as a
participant/co-publisher in the publisher's share of income earned for the Musical
Compositions, by applying the formula contained in the 1972Songwriters Agreement, not
modified by the 1975 Memorandum to various categories of income. Until the accounting for the
period ending December 31, 2013, such accountings included payment to Plaintiffs, a
participants/co-publishers share of all Music Composition Royalty Categories including, without
limitation, the publisher's share
of
public performance collected from ASCAP,
48. Suddenly, for the accounting period ending December 31, 2013, Defendants,
without any basis for doing so, eliminated performance income as a categoryof income for
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which theywere paying royalties, even though theyhad paid royaltieson such performance
income without fail for nearly four decades, including both after and before the Settlements. This
modification to the revenue base is wholly independent of the resulting formula to be applied under
either the 1972Songwriters' Agreement or the 1975Memorandum, and constitutes a separate and
independent issue.
49. This Action seeks resolution
of
the meaning of the 1975 Amendment as used in
the Settlement Agreement, including without limitation a determination that all Music Composition
Royalty Categories, including, without limitation, public perfonnance royalties, are subject to
Defendants' obligation to pay royalties.
50. Plaintiffs alsocontend thatthe
1975
Amendment unproved Plaintiffs' >
participant/co-publisher share by making certain improvements to the formula contained in 1|22of
the 1972Agreement and this is also part of Plaintiffs' claims for reliefand damages herein.
FIRST CAUSE OF ACTION
(Declaratory Relief against the Goldstein Defendants and DOES 1 through 20)
51. Plaintiffs hereby incorporate paragraphs I through 50 as though set forth folly
herein.
52. Plaintiffsare infonned and believeandbased thereon allege that there are existing
disputes as to the fonnula to be applied to the Goldstein Defendants' accountings and payments
pursuant to paragraph 5.A.i.
of
the Settlement Agreements.
53. Specifically, Plaintiffs believe that the present dispute involves at least two separate
and independent issues. First, whether the publisher's share
of
public performance revenues are to
be included in the revenue base for the calculationand payment of Plaintiffs' participation pursuant
to paragraph22 of the 1972Songwriters' Agreement before applying themodifications required by
th e
1975
Memorandum. Second,
the ef fect of
th e
modifications
se t
forth
i n t he 1 975 Memorandum
incalculating the amount to be paid to Plaintiffs.
54. Plaintiffs contend that (a) die publisher'sshare
of
public performance revenues is
includedin the revenue baseof the payments required by paragraph 22of the 1972Songwriters'
Agreement (irrespective of any modifications to amount paid on that revenue base by die 1975
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Memorandum), and (b) the effect of the modifications set forth in the 1975Memorandum result in
a significant increase in die amount to be paid to Plaintiffs.
55. Plaintiffs are infonned and believe and based thereon allege that Defendants dispute
that the publisher's share
of
public performance monies are included
in
the revenue base and that
themodifications to paragraph22of the 1972 Songwriters' Agreementset forth in the 1975
Memorandum have any effect on the amounts paid to Plaintiffs.
56. Accordingly, an actual controversy has arisen and presently exists as to the rights
and duties of die parties hereto, as alleged herein, as towhich Plaintiffs request, and are entitled to,
a detennination
in
accordance
with
their contentions
herein.
57. In addition, and based upon the resolution
of
the conect formulae, Plaintiffs are
informed
andbelieveand
based
thereon allege thatfor thebi-annual periods commencing January
1,
2011
throughpresent, theGoldstein Defendants havesubstantiallyunderreported and underpaid
Plaintiffs in an amount to establishedat trial, but believed to be in excess of 300,000, and which
underpayment should be ordered paidandaccounted foras part of thedeclaratory relief.
SECOND
CAUSE
OF ACT ION
(Breach ofContract against the Goldstein Defendants and DOES 1 through 20)
58. Plaintiffs
hereby
incorporate paragraphs 1 through50 as though set forth
fully
herein.
59. Plaintiffs are infonned and believe and
based
thereon allegethatPlaintiffs have fully
sufficiently performed all covenants and conditions required tobe performed on theirpartunder
the
Settlement Agreements,
except
to theextent excused, prevented, or
waived.
Plaintiffs are further
informed and believe
and
based diereon allege
that
Plaintiffs have
not
been and
arenot
presently
in
material breachof the SettlementAgreements in any manner that excuses the Goldstein
Defendants' further and continuing obligations.
60. TheGoldstein
Defendants
havematerially breached the Settlement Agreements by,
among other
things:
(a) failing touse the conect formulae in calculating Plaintiffs' paymentsin
connection with themusical compositions, (b) altering the revenue baseupon which theGoldstein
Defendants
calculated
Plaintiffs'
payments under
paragraph
22of the
1972
Songwriters' Agreement
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(inespective of andbefore applying the increases required bythe 1975
Memorandum
which donot
relate to theunderlying revenue base),and (c) failing to adequatelyand completelyaccount to
Plaintiffs forall accounting periodsafter executionof the SettlementAgreements.
61. Plaintiffs are informed and believe, and based thereon allege, that die Settlement
Agreements
contain
an
implied covenant
thateach
party shall
conduct himselfTherself/itself in
good
faithandwill
fairly
deal with theotherpartiesand thatnopartywill interfere withor deprivethe
other of the benefitsof the agreements. Pursuant to this implied covenant, Defendants owed
Plaintiffs to act in a reasonable manner in their accountings and payments under the Settlement
Agreements.
62. Plaintiffs are informedand believe and based thereon allege that by altering the
revenue base upon which Plaintiffs' paymentsunder paragraph 22 of the 1972Songwriters'
Agreement as modified by the 1975Memorandum were calculated in connection with the reports
for the periodending December31, 2013,Defendantsbreachedthe implied covenantof good faith
and fair dealing.
63. As a direct and proximate resultof theaforesaid materialbreaches, Plaintiffsare
informed and believe, and based thereon allege, that Defendants have damaged Plaintiffs in an
amount
of
not
less
than 300,000.
WHEREFORE, Plaintiffs pray for judgment against Defendants, and each of them, as
follows:
1. For a declaration that the publisher's share of public performance revenue is to be
included in the revenue base upon which Defendants account to and pay Plaintiffs pursuant to 1975
Amendment
(i.e.,
pursuant to paragraph 22 of the 1972Songwriters' Agreement as modified by
paragraph 2(d)-2(f)
of
the 1975 Memorandum).
2. For a declaration that based upon the 1975Amendment, Defendants are obligated to
account to and pay Plaintiffs in connection with the Musical Compositions in two separate and
27 independent roles as follows:
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a. First, for Plaintiffs' royalties as songwriters (i.e., the songwriter's share)
pursuant to paragraph7 of the 1972Songwriters'Agreementwhich remains unmodifiedby
anything in the 1975Memorandum.
b. Second, for Plaintiffs' participation as co-participants in the publisher's share
of revenue pursuant toparagraph 22of the
1972
Songwriters' Agreement as specifically modified
by paragraphs2(d)-2(f)of the 1975Memorandum, which results in the following formula:
i. Inadditionto the songwriter royalties provided for in paragraph 7 of
the 1972Songwriter's Agreement which remainunchanged, ail monies
earnedand received from thesale, lease, license,disposition or other turning
to account of rights in theCompositions,
including
alt monies received from
all sources including inconnection with the infringement by thirdparties of
rights in the Compositions and the publisher's share ofpublic performance
royalties ( Composition Gross Receipts ), shall be treated as follows:
(a) Publisher shall be ent itled first to deduct twenty-five percent
(25 )
from the Composition Gross Receipts in consideration of its services
and also the direct feesof a trustee or collective for the licensing of
recordings(such fees not to exceed the standardHarry Fox fees)and actual
legaland accounting fees relating to theCompositions including those
arising
outof anyclaim of copyright
infringement brought
byor
against
the
Publisher. All other directcosts relating to theCompositionssuch as
copyright, printing, engraving, advertising,
promoting
and exploiting the
Compositions shall be borne solely by Publisher;
(b) Publishershall thendeduct
from
Composition GrossReceipts
and pay therefromthe royaltiesdue to the compositions
of
the Compositions
in accordance withanyagreement Publishermayhavewith suchcomposers
(including withoutlimitation, paragraph 7 of the 1972 Songwriters'
Agreements);
(c) No further deductions.
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(d) 100% ofthe balance of the Composition Gross Receipts
remaining after the deductions
set
forth inparagraphs 22(a) and (b), above,
shall
belong
to Plaintiffs on a prorata basis.
For an accounting;
For
damages according
toproofat
trial
inan amount tobe determined at
trial
but
believed to exceed
300,000;
5.
For pre-judgment interest
as
permitted
by law;
For post-judgment interest aspermitted by law;
For attorneys' fees as provided
by
the Settlement
Agreements;
For costs of suit; and
For such other
further relief at law or in equity which the court
deems
proper.
DATED: October 3,2014 FREUNDLICHLAW
&
LAW OFFICES OF MAX J. SPRECHER
* **
Kenneth
D.
Freundlich
Attorneys for Plaintiffs
Harold Brown, Lee Oskar Levitin, Howard
Scott,
Morris Dickerson, Jr. as Conservator
of
the Estate
of
Morris Dewayne ( BB ) Dickerson, and Laurian
Miller
onher
own behalf
andas
assignee
of
the Heirs
ofCharles Miller
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