On November 6, 2018, U.S. District Judge Christina Snyder dismissed without prejudice claims filed by a class of session musicians based upon defendants' breach of their duty of impartiality, but denied the motion to dismiss claims based upon breaches of loyalty, reasonableness and good faith.
On June 22, 2018, Kiesel Law LLP and Johnson & Johnson LLP filed a class action suit on behalf of “session musicians” against The Screen Actors Guild‐American Federation of Television and Radio Artists (“SAG-AFTRA”), the American Federation of Musicians, and the Intellectual Property Rights Distribution Fund (collectively “Unions”), claiming the Unions breached their duties to session musicians and backup singers by taking a 3 percent service fee from all royalties owed to them. Plaintiff argued that trustees unnecessarily diverted money from a distribution fund — which was created to be independent of the unions and is used to oversee the royalty distributions to nonfeatured musicians and singers — directly to the unions to pay their service fees, and that the unions “paid themselves expenses in addition to the service fee.” Generally, session musicians and backup singers who work in the entertainment industry must join the aforementioned Unions because most record labels have agreements with them.
Essentially, “non-featured artists” (such as “session musicians”) are artists who are not prominently featured on a sound recording, track or album. Royalties for “non-featured artists” are paid by organizations such as the American Federation of Musicians (AFM) and SAG-AFTRA, who receive the funds from Sound Exchange, a non-profit collective rights management organization designated by the U.S. Congress to collect and distribute digital performance royalties for sound recordings.
The suit claims that the defendants “were trustees of the Fund, but were acting with deep conflicts of interest to the benefit of the unions [taking a 3 percent service fee from all royalties], by which they were employed. This service fee reduces the amount of capital in the Fund and therefore reduces the amount of money available to the beneficiaries of the Fund.”
Plaintiff claims that SAG-AFTRA diverted money from the distribution fund- a fund used the pay royalty distributions to nonfeatured musicians and singers- directly to the unions and that the unions “paid themselves expenses in addition to the service fee.”
Plaintiff has accused the unions of taking more than $1.7 million in service fees in 2016 alone.
Risto is represented by Paul R. Kiesel and Mariana A. McConnell of Kiesel Law LLP, and Neville L. Johnson, Jordanna G. Thigpen and Daniel Lifschitz of Johnson & Johnson LLP.
SAG-AFTRA and the other unions are represented by Andrew J. Thomas, Andrew G. Sullivan, Kenneth L. Doroshow and Devi M. Rao of Jenner & Block LLP.
The suit is Kevin Risto v. Screen Actors Guild-American Federation of Television and Radio Artists et al., case number 2:18-cv-07241, in the U.S. District Court for the Central District of California.
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