Former Beach Boys member loses lawsuit against UMG over foreign streaming royalties

LOS ANGELES (CN) — Former Beach Boys David Marks lost his bid to hold Universal Music Group liable for allegedly underpaying him royalties from international streaming revenue.

U.S. District Judge Mark Scarsi in Los Angeles on Wednesday dismissed Marks' lawsuit, saying he failed to articulate a legally sufficient fraud claim and also failed to show what specific contract agreement UMG was supposed to have violated. The judge had previously dismissed the claims but allowed Marks an opportunity to fix its shortcomings.

"Plaintiff attaches no contract or fraudulent royalty statement to the Second Amended Complaint, and once again Plaintiff makes no effort to narrow his serious fraud accusations to a reasonably discrete period or individual such that UMG can meaningfully respond," the judge said. "These vague statements do not 'state with particularity the circumstances constituting fraud.'"

This time the judge didn't allow further amendment of the allegations and closed the case. Lawyers for Marks didn't immediately respond to an email seeking comment on the ruling.

The former Beach Boy sued UMG last year and sought to represent other artists, or their heirs, who had contracts with the company in a class-action lawsuit. According to Marks' complaint, the 1962 contract between Capital Records, which is now part of UMG, and the Beach Boys, and subsequent amendments to that contract were based only on record sales. With the advent of digital streaming, records are now just a small fraction of music sales.

UMG, however, has been paying royalties over streaming revenue as well because, Marks alleges, it would have been a public relations disaster if they didn't and artists would have rescinded their contracts and reclaimed their work. But, according to Marks, UMG has been shortchanging the artists by allowing its foreign subsidiaries to take a cut from their revenue before calculating the royalties the artists are entitled to.

"By having their foreign affiliates assess an 'intercompany charge' with no relation to actual costs incurred by the affiliates and no disclosure to the affected artists, Defendants artificially and clandestinely reduced Plaintiff’s and Class Members’ royalty pools for their own financial benefit," according to Marks' lawsuit.

This argument wasn't enough to support Marks' claim that UMG breached its contract with him, according to Scarsi.

"Plaintiff still has not pleaded a bargained-for agreement that Defendants breached," the judge said. "Plaintiff only presents excerpts of past contracts that do not mention digital streaming."

Follow @edpettersson

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