(CN) - A federal judge rejected Universal Music Group's attempt to toss a class action over ringtone royalties allegedly owed to musicians led by the late "Superfreak" star Rick James and heavy metal star Rob Zombie.
James' estate sued UMG Recordings on behalf of other similarly situated recording artists and music producers.
The complaint in California's Northern District Court claims Universal improperly characterized the agreements to sell ringtones as "resale" agreements, rather than license agreements.
The resale agreements "entitle the recording artists and music producers to a much smaller percentage of the income derived therefrom than does the income derived from a license agreement," the complaint says.
Universal moved to dismiss, claiming the plaintiffs are neither consumers nor competitors, and thus could not state a claim for unfair competition.
U.S. District Judge Susan Illston disagreed.
"Plaintiffs have alleged more than just a breach of contract because the complaints allege that UMG engaged in a broad scheme to underpay numerous royalty participants, including formulating 'an opaque and artificial method for accounting for and paying its royalty participants for income derived from such licenses,'" Illston wrote.
In the same action, San Francisco rock band The Tubes filed a motion to intervene, alleging its claims are parallel to those of Rick James.
Judge Illston agreed with UMG that intervention is not appropriate, and wrote that the plaintiffs can add The Tubes as class representatives in an amended complaint.
The order also applies to a related lawsuit led by Rob Zombie, whose legal name is Robert Cummings. Their complaints rely on 9th Circuit precedent that found Universal Music Group's Aftermath Records had underpaid on music download royalties to Eminem's producers, a decision effectively affirmed by the Supreme Court, which refused to let the label appeal.
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