On April 13, 2020, Harris County District Judge Robert K. Schaffer in Houston ruled in favor of rapper Megan Thee Stallion in a dispute with her record label 1501 Certified Entertainment LLC (“1501”). In a one sentence order, Judge Schaffer denied the Defendants' request to compel arbitration.
Megan Thee Stallion, real name Megan Pete, filed the lawsuit on March 2, 2020, against her label and it's CEO, ex-MLB professional baseball player Carl Crawford, alleging that the contract she initially signed with the label is “unconscionable and oppressive” and that she was fraudulently induced (“duped”) into signing the agreement in February of 2018.
The contract terms at issue are: 1501 gets 60% of all recording income, 1501 gets a 50% copyright interest in songs Pete writes, and 1501 gets 100% of the administration rights (ability to control) to the songs.
1501 argued that all of the claims “relate to the artist agreement or the relationship of the parties thereunder, bringing all of Plaintiff's claims within the scope of the arbitration clause.” Pete, on the other hand, argued that the labels interpretation of the arbitration clause was incorrect, claiming the provision is permissive, not mandatory, pointing to the words that either party “may make a demand for arbitration.” (emphasis added). Pete also argued that her claims did not fall within the arbitration provision, stating that the clause “does not concern ‘all disputes' … Rather, [it] is narrowly tailored and limited to ‘questions regarding the rights and obligations of the parties under the terms of' the contract.”
Moreover, Pete requested a temporary restraining order against her label, which Judge Schaffer granted on March 2, 2020 so that 1501 could not take retaliatory action against Pete by preventing the release, distribution and/or sale of Megan Thee Stallion's new music scheduled for a March 6, 2020 release.
Finally, Pete also told the court that 1501 had failed to register her songs with the US Copyright Office or otherwise properly protect her intellectual property, and accused the label of misrepresenting their abilities as a “full-service record label[.]”
Keeping the dispute out of arbitration is a major victory for Megan Thee Stallion by allowing her to continue to apply pressure on her label moving forward with the case in the public eye – arbitration is not a matter of public record – and it allows for appeals if necessary. Clearing this hurdle allows for a much easier path to a settlement resolution between the parties. Once a relationship has soured, especially creative relationships, there is almost no way back to each other. Generally, the best and easiest solutions are to release the artist from their contract, but the issue becomes how to best “split the baby.”
Plaintiff Megan Thee Stallion Pete is represented by Bradley Hancock and Andrea James of Holland & Knight LLP and Richard S. Busch of King & Ballow.
Defendants' 1501 and Crawford are represented by Tom Van Arsdel and Jacqueline Del Villar of Winstead PC.
The case is Megan Pete v. 1501 Certified Entertainment LLC et al., case number 2020-14018, in the 152nd District Court in Harris County, Texas.