Sony BMG Denied Stay of Download Royalties Suit

A magistrate for the U.S. District Court for the Southern District of New York refused to stay a class action suit by BMG recording artists that is seeking 50% of net revenues the record label receives from digital download, ringtone and ringback sales. The Youngbloods v. Sony BMG Music Entertainment Inc., Civ. 2394(GBD)(KNF). Sony BMG moved to stay the suit after it filed its own action in August 2010, in the Northern District of California, against the members of the 1960s folk rock group The Youngbloods. The California complaint asks for rescission of a 1995 agreement between The Youngbloods and BMG on the ground that the artists allegedly made false representations and warranties in the 1995 contract.

In its bid to have The Youngblood's New York action stayed while the California case is litigated, BMG argued that “resolving the merits of rescission before delving [in the New York litigation] into the intricacies of contractual interpretation, the custom and practice of the recording industry, and class certification would spare the parties and the Court from researching, briefing, and deciding complex issues that may be rendered entirely unnecessary by a simple ruling on rescission.”

But U.S. Magistrate Judge Kevin N. Fox noted: “In light of the fact that the two related actions [i.e., The Youngbloods New York suit and a pending parallel New York class action involving Sony label artists, Allman v. Sony BMG Music Entertainment Inc., 06 Civ. 3252(GBD)(KNF)] contain identical claims against the defendant for breach of contract concerning royalties for digital downloads leased to music download service providers and mobile phone ringtone and ringback providers, the outcome of the California action is irrelevant to the Court's obligations to manage its cases and use judicial resources efficiently.” However, Magistrate Fox did grant Sony BMG's motion to amend its answer in The Youngbloods New York case to raise rescission of the 1995 agreement as an affirmative defense.

A magistrate for the U.S. District Court for the Southern District of New York refused to stay a class action suit by BMG recording artists that is seeking 50% of net revenues the record label receives from digital download, ringtone and ringback sales. The Youngbloods v. Sony BMG Music Entertainment Inc., Civ. 2394(GBD)(KNF). Sony BMG moved to stay the suit after it filed its own action in August 2010, in the Northern District of California, against the members of the 1960s folk rock group The Youngbloods. The California complaint asks for rescission of a 1995 agreement between The Youngbloods and BMG on the ground that the artists allegedly made false representations and warranties in the 1995 contract.

In its bid to have The Youngblood's New York action stayed while the California case is litigated, BMG argued that “resolving the merits of rescission before delving [in the New York litigation] into the intricacies of contractual interpretation, the custom and practice of the recording industry, and class certification would spare the parties and the Court from researching, briefing, and deciding complex issues that may be rendered entirely unnecessary by a simple ruling on rescission.”

But U.S. Magistrate Judge Kevin N. Fox noted: “In light of the fact that the two related actions [i.e., The Youngbloods New York suit and a pending parallel New York class action involving Sony label artists, Allman v. Sony BMG Music Entertainment Inc., 06 Civ. 3252(GBD)(KNF)] contain identical claims against the defendant for breach of contract concerning royalties for digital downloads leased to music download service providers and mobile phone ringtone and ringback providers, the outcome of the California action is irrelevant to the Court's obligations to manage its cases and use judicial resources efficiently.” However, Magistrate Fox did grant Sony BMG's motion to amend its answer in The Youngbloods New York case to raise rescission of the 1995 agreement as an affirmative defense.