(CN) - Record company Aftermath owes rapper Eminem's production company F.B.T. Productions royalties on digital downloads of songs from his "Recovery" and "Relapse" albums.
Aftermath and its owners claimed it did not owe F.B.T. because the production company is entitled to royalties under a 2003 agreement, and the two albums are governed by a new contract between Eminem and Aftermath that was signed in 2009.
U.S. District Judge Philip Gutierrez disagreed. "It is hornbook law that a contract can benefit a nonparty - and such intended beneficiary can sue on the contract," he wrote. "However, a contract cannot bind a nonparty, whether the nonparty is an intended beneficiary or not. Eminem's royalties for Recovery and Relapse may be dictated by the separate deal he struck with Aftermath in the 2009 agreement. But, even defendants admit the two albums were still counted as part of Eminem's recording commitment under the 2003 agreement. Therefore, defendants owe plaintiffs royalties from the licensing of masters from Recovery and Relapse in accordance with the 2003 agreement."
The 9th Circuit had previously remanded the case, having ruled that Aftermath owed F.B.T. some form of damages for failing to pay the royalties. F.B.T. told the trial judge that the federal appeals court's decision required Aftermath to pay a 50 percent royalty rate, or $1,474,270.
Gutierrez disagreed, finding the 9th Circuit's ruling did not analyze the calculation of damages.
"The sentence quoted by plaintiffs simply parrots the general language of the masters licensed provision, which states that a 50% royalty rate applies," he wrote. "It is odd, to say the least, for plaintiffs to assure the Ninth Circuit that on remand damages would still have to be determined, but to now inform this court that the Ninth Circuit has already decided the damages issues."
Gutierrez also found the albums "Re-Up" and the "8 Mile" soundtrack constitute side projects and are not covered by the 2003 contract.
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