Studios Can’t Duck Suit Over ‘Spinal Tap’ Royalties

LOS ANGELES (CN) – A federal judge on Tuesday advanced the bulk of claims brought by the creators of “This Is Spinal Tap” over profits from the 1984 cult film.

Co-creators of the mockumentary – Harry Shearer, Christopher Guest, Rob Reiner and Michael McKean – claim French film studio Vivendi cut them out of their share of $400 million in commercial profits after acquiring the rights to “This Is Spinal Tap” in 1989.

A 1982 production agreement called for the artists to receive 40 percent of all net profits from the film.

After they commissioned a study that found Vivendi and its subsidiaries Studiocanal and Universal Music Group engaged in “willful misconduct” and intentionally concealed facts in accounting statements, the artists sued Vivendi and its subsidiaries and sent copyright termination notices to defendants Universal Music Group and UMG Recordings.

The Universal defendants filed a motion to dismiss the artists’ claims relating to music recordings. Universal Music Group claimed the notices didn’t affect their recordings because they were not a party to the 1982 agreement.

Defendants – including Studiocanal exec Ron Halpern – also moved to dismiss the artists’ fraud claims relating to the film’s royalties.

In a 22-page order issued Tuesday, U.S District Judge Dolly M. Gee denied Vivendi’s motion to dismiss fraud claims related to the film but granted Universal’s motion to dismiss contract claims relating to music royalties with leave to amend.

Specifically, Gee said while the artists adequately showed Universal is a successor-in-interest to the music featured in the film, they did not show Universal was obligated to honor its predecessor’s contract with the artists. But she gave the artists 21 days to show in an amended complaint how Universal breached the 1982 agreement.

But as to the artists’ claims of fraud on the part of the defendants – they claim Vivendi estimated their share of “Spinal Tap” income to be $81 from merchandise sales between 1984 and 2016, and $98 from record sales between 1989 and 2016 – Gee said a sufficient case has been made at this point to allow the case to go on.

“Because UMG allegedly underreported and underpaid music-related earnings to Studiocanal, and Studiocanal allegedly underreported and underpaid all ‘This Is Spinal Tap’ earnings to plaintiffs, it is not clear whether the allegations of improper expense deductions and undocumented charges are aimed at the Studiocanal defendants (and their agents or representatives) as well as, or instead of, UMG. Given plaintiffs’ allegations that Vivendi’s subsidiaries, including UMG, worked together to hide profits and manipulate revenue, and that defendants have exclusive knowledge over the accounting process, it is plausible that Plaintiffs would not know all minute details of the alleged fraud,” Gee wrote.

“The court therefore will not dismiss the fraud allegations for lack of specificity due to minor ambiguities in the pleading. plaintiffs have sufficiently alleged a fraudulent scheme that involves UMG, and which sufficiently puts defendants on notice of the import of the allegations against them.”

As to the artists’ demand to revert copyrights to them as of March 2019 – which Universal said is premature – Gee found the very point of the lawsuit, that defendants had not used the copyrights to benefit the artists, makes the demand ripe for adjudication.

A Vivendi representative did not immediately respond to a request for comment.

Shearer filed the initial $125 million lawsuit against Vivendi in October 2016. The other artists joined the lawsuit in 2017 and bumped the claims to $400 million.

The film, a satire about a British rock band on the decline, has been featured on numerous top movie lists of all time since its 1984 release. It was made for $2.25 million and earned $4.5 million in North American theaters alone when it was released, according to figures from box office analysis firm comScore.

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