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Law360 Covers Johnson & Johnson's Class Certification Win in Royalty-Skimming Lawsuit Against AFM and SAG-AFTRA (Sept. 15, 2020)

Posted by Johnson & Johnson, LLP | Sep 15, 2020 | 0 Comments

Over 30K Musicians Win Class Cert. In SAG-AFTRA Suit


September 15, 2020

By Hannah Albarazi

Over 30K Musicians Win Class Cert. In SAG-AFTRA Suit

More than 30,000 session musicians and vocalists have won class certification in a lawsuit alleging the Screen Actors Guild‐American Federation of Television and Radio Artists and the American Federation of Musicians drained millions of dollars from an artists' fund set up by Congress.

U.S. District Judge Christina A. Snyder granted musician Kevin Risto's bid for class certification on Monday, finding that his action presented common questions of law.

Risto, a musician who has written songs for Justin Bieber, Jennifer Lopez and Frank Ocean, brought his proposed class action against the unions and the trustees of the AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund in 2018, claiming the trustees breached their duties to session musicians and backup singers by agreeing to a 3% service fee on all royalties owed.

The judge appointed Risto class representative for a class estimated to consist of 30,000 session musicians and backup singers who allegedly had their royalties “skimmed” following the implementation of the service fee beginning in July 2013.

Plaintiffs estimate that the class includes an additional 60,000 beneficiaries who are eligible to receive distributions from the fund, but have not yet been paid.

Judge Snyder wrote in her order that each nonfeatured performer — regardless of whether they received distributions — has suffered an “injury in fact,” by virtue of their statutory entitlement to royalties from which the service fee has been deducted and has Article III standing.

The fund, which distributes royalties legally required to be paid by streaming services such as Pandora and Sirius XM to nonfeatured musicians, has distributed more than $430 million in royalties since it was created in 2008, the unions said earlier this year.

The unions received more than $1.7 million in service fees in 2016 and continue to receive money from the fund each year, Risto claims.

Risto, who is not a member of the unions but is entitled to royalties, argues trustees of the unions' Intellectual Property Rights Distribution Fund unnecessarily diverted money from the fund — which was created to be independent of the unions — directly to the unions to pay the service fees.

The trustees who approved the services agreement acted with “deep conflicts of interest” to the benefit of the unions and against the benefit of the fund beneficiaries, Risto alleges. He seeks reimbursement of the service fee payments.

However, the defendants have argued that under an underlying agreement, the trustees were entitled to control those funds.

Class counsel lauded the judge's decision to certify the class.

“This is a great victory for nonfeatured performers who are fund beneficiaries,” class counsel Mariana A. McConnell of Kiesel Law LLP told Law360.

“The defendants tried to limit the class by excluding those fund beneficiaries who they have not yet found, essentially trying to use their failure to identify and pay performers to their advantage by limiting their liability,” McConnell said. “The court ruled in our favor, saying that all beneficiaries have a statutory property right to these royalties and are therefore properly included in the class.”

“We look forward to protecting the rights of thousands of musicians and vocalists,” class counsel Neville Johnson of Johnson & Johnson LLP told Law360.

Counsel for the defendants declined to comment on Tuesday.

Risto is represented by Paul R. Kiesel, Mariana A. McConnell and Nico L. Brancolini of Kiesel Law LLP and Neville L. Johnson, Jordanna G. Thigpen and Daniel Lifschitz of Johnson & Johnson LLP.

The unions are represented by Andrew J. Thomas 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.

–Editing by Nicole Bleier.

Original Article – Law360

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