<b>Decision of Note: </b>Trial Court Rules On 'Recording Commencement'

The U.S. District Court for the Southern District of New York upheld a jury determination in favor of a producer plaintiff on the meaning of 'commencement of recording' in a production-release agreement. T.E.A.M. Entertainment Inc. v. Douglas, 04 Civ. 1552.

Artist Ashanti and her mother had asked Gerald Parker to help them find a major-label deal. Ashanti and Parker entered into two production agreements. But after a year, Ashanti asked to be released so that she could go after a deal with Noontime Music, one of Parker's competitors. Parker signed an agreement releasing Ashanti that, in addition to a royalty-percentage right, stated:

'You [Parker's company T.E.A.M.] shall have the right to produce two (2) masters for my [Ashanti's] first album recorded pursuant to the Noontime Agreement [i.e. Ashanti's record agreement with Noontime]. You should be paid an all-in recording fund in the amount of $25,000 for each said two (2) masters ($10,000 of which, per master shall be deemed to be a recoupable producer' fee advance) exclusive of mastering costs and fees or advances payable to Ashanti Douglas or us for recording. Said advance shall be payable to you one half (1/2) upon the commencement of recording and the balance upon the delivery to and acceptance of the masters by Noontime Music, Inc.'

Parker filed suit against Ashanti and her mother after he received no payments. The defendants claimed that the term 'commencement of recording' was a term of art that the drafting lawyer testified meant 'when you have songs, the songs are approved, you submit a budget, and then you begin the recording process.' Parker testified, however: 'I commenced [recording] by ' continuing to embellish the recordings that we had with previously worked on, that I thought ' not that I thought ' that I knew that I was told that this new company had taken some sort of a liking to, with the hope that maybe they would use these, one of these songs, and I continued to commence by creating new material that I felt would be suitable for the project. ' As far as the new ' recordings that I was ' would hope to be used by Ashanti, I would create from the starting with the
creative sessions and editing sessions.'

The trial court told the jury that '[contract] terms are to be given their ordinary meanings except where the terms are specifically defined in the contract or where you find that they are terms of art and should be given the special meanings testified to.' The jury decided that the defendants breached the release agreement.

Denying the defendants' motion for a judgment as a matter of law, the district court emphasized: 'The Release Agreement was drafted by Kendall Minter, who also drafted the Noontime Agreement. In the latter, he expressly defined 'commencement of recording' as a term of art, ' but in the Release Agreement he left it undefined. ' While he testified that people in the recording business would nonetheless recognize it as a term of art, Parker, who indisputably was in the business, testified to the contrary, saying that, in his experience, 'commencement of recording' meant undertaking the
prerequisites to recording, such as creating the music and editing the background tapes. ' This was more than sufficient to create a genuine factual dispute, which the jury resolved in plaintiff's favor.'

But granting the defendants' request for a new trial on Parker's lost profits, the court noted that plaintiff's expert Seymour Straus 'assumed that Ashanti's albums released by Universal [with whom Ashanti ultimately signed and became successful] were a good proxy for (the unknowable) royalties from the hypothetical Noontime albums. [No Ashanti albums were released under the Noontime contract.] However, upon review, the Court is of the view that plaintiff never presented the jury with any material evidence with which to evaluate the plausibility of the analogy. This is not a case of an established artist, for, at the time here relevant, Ashanti was a virtual unknown. The jury was never provided with any way to evaluate how Noontime, a company with different resources than Universal, might have fared in trying to promote this unknown artist to stardom.'

The U.S. District Court for the Southern District of New York upheld a jury determination in favor of a producer plaintiff on the meaning of 'commencement of recording' in a production-release agreement. T.E.A.M. Entertainment Inc. v. Douglas, 04 Civ. 1552.

Artist Ashanti and her mother had asked Gerald Parker to help them find a major-label deal. Ashanti and Parker entered into two production agreements. But after a year, Ashanti asked to be released so that she could go after a deal with Noontime Music, one of Parker's competitors. Parker signed an agreement releasing Ashanti that, in addition to a royalty-percentage right, stated:

'You [Parker's company T.E.A.M.] shall have the right to produce two (2) masters for my [Ashanti's] first album recorded pursuant to the Noontime Agreement [i.e. Ashanti's record agreement with Noontime]. You should be paid an all-in recording fund in the amount of $25,000 for each said two (2) masters ($10,000 of which, per master shall be deemed to be a recoupable producer' fee advance) exclusive of mastering costs and fees or advances payable to Ashanti Douglas or us for recording. Said advance shall be payable to you one half (1/2) upon the commencement of recording and the balance upon the delivery to and acceptance of the masters by Noontime Music, Inc.'

Parker filed suit against Ashanti and her mother after he received no payments. The defendants claimed that the term 'commencement of recording' was a term of art that the drafting lawyer testified meant 'when you have songs, the songs are approved, you submit a budget, and then you begin the recording process.' Parker testified, however: 'I commenced [recording] by ' continuing to embellish the recordings that we had with previously worked on, that I thought ' not that I thought ' that I knew that I was told that this new company had taken some sort of a liking to, with the hope that maybe they would use these, one of these songs, and I continued to commence by creating new material that I felt would be suitable for the project. ' As far as the new ' recordings that I was ' would hope to be used by Ashanti, I would create from the starting with the
creative sessions and editing sessions.'

The trial court told the jury that '[contract] terms are to be given their ordinary meanings except where the terms are specifically defined in the contract or where you find that they are terms of art and should be given the special meanings testified to.' The jury decided that the defendants breached the release agreement.

Denying the defendants' motion for a judgment as a matter of law, the district court emphasized: 'The Release Agreement was drafted by Kendall Minter, who also drafted the Noontime Agreement. In the latter, he expressly defined 'commencement of recording' as a term of art, ' but in the Release Agreement he left it undefined. ' While he testified that people in the recording business would nonetheless recognize it as a term of art, Parker, who indisputably was in the business, testified to the contrary, saying that, in his experience, 'commencement of recording' meant undertaking the
prerequisites to recording, such as creating the music and editing the background tapes. ' This was more than sufficient to create a genuine factual dispute, which the jury resolved in plaintiff's favor.'

But granting the defendants' request for a new trial on Parker's lost profits, the court noted that plaintiff's expert Seymour Straus 'assumed that Ashanti's albums released by Universal [with whom Ashanti ultimately signed and became successful] were a good proxy for (the unknowable) royalties from the hypothetical Noontime albums. [No Ashanti albums were released under the Noontime contract.] However, upon review, the Court is of the view that plaintiff never presented the jury with any material evidence with which to evaluate the plausibility of the analogy. This is not a case of an established artist, for, at the time here relevant, Ashanti was a virtual unknown. The jury was never provided with any way to evaluate how Noontime, a company with different resources than Universal, might have fared in trying to promote this unknown artist to stardom.'