Black Sheep Has Lost Its $750 Million Lawsuit Against Universal Music
Earlier this year, respected Hip-Hop duo Black Sheep filed at $750 million class-action lawsuit against Universal Music Group. The duo of Andres “Dres” Vargas Titus and William “Mista Lawnge” McLean alleged that UMG agreed to a royalty agreement with Spotify in 2008 that violated compensation structures previously in place for groups including Black Sheep.
Per the lawsuit, an initial 1990 Mercury Records contract required the parent label (now Universal Music Group) to pay 50% of all net receipts connected to the exploitation of Black Sheep’s outputs. The suit says that the corporation failed to fulfill that contract’s obligations, and cheated artists like and including Black Sheep out of $750 million, based on the value of the Spotify equity, which value allegedly was not shared with artists.
“Even accepting Plaintiffs’ alternative argument that UMG breached the contract again after Spotify’s IPO in 2018,” Judge Rochon wrote, “Plaintiffs’ failure to bring those claims within two years of UMG’s alleged breach still renders them untimely.”
The judge reportedly described as “time barred” each of Black Sheep’s claims excepting that concerning “lowered royalty payments issued after January 4, 2021,” the day the lawsuit was submitted, per Digital Music News. The court also dismissed the final claim, finding that the “plain language” of the relevant agreement did not support the breach-of-contract argument. “The contract’s plain language does not support Plaintiffs’ theories of breach, Plaintiffs’ only timely claim – that UMG breached the contract by agreeing to lower royalties for which it did not compensate Plaintiffs – finds no support in the contract,” Judge Rochon wrote.
The judge added, “UMG’s alleged acquisition of Spotify equity is not solely attributable or traceable to the actual exploitation of a particular artist’s sound recording. Thus, because UMG’s Spotify stock does not count as ‘net receipts,’ UMG did not breach the contract by failing to account for its value when paying Plaintiffs their royalties.” Additionally, surrounding the court decision to not give the Hip-Hop duo the chance to amend, the court indicated “that leave to amend is not warranted because it would be futile.”
#BonusBeat: In January, Ambrosia For Heads’ What’s The Headline podcast reacted to the reports of the lawsuit with a comprehensive breakdown: