Universal Music says that an explosive lawsuit filed against it by Limp Bizkit’s Fred Durst is “based on a fallacy” and that an email exchange actually cited in that lawsuit “eviscerates” his core claim. Which means Durst can’t terminate his old deals with the major, a move that he said meant Universal now owed him at least $200 million.
That core claim was that the major “designed and implemented” a royalty system “deliberately designed to conceal artists’ royalties and keep those profits for itself”. However, insists Universal in its own legal filing, the email exchange cited by Durst shows that it proactively reached out to try to pay the musician royalties he was due, but a business manager incorrectly stated that the Limp Bizkit frontman had sold his royalty rights to a third party.
Durst said in his lawsuit that his team only discovered that he was owed millions in royalties after business manager Paul Ta contacted Universal in April this year. But, the major claims, the email exchange shows that, “over a year earlier, a senior director in the royalties department at UMG had unilaterally and affirmatively reached out to that same business manager” to say they needed to get Limp Bizkit set up on their system so they “could start making royalty payments to the band”.
It was then that Ta allegedly told Universal that Durst and most of his bandmates had sold their royalty rights to a third party. It’s increasingly common for successful artists who allowed their labels to own the copyright in their recordings to then sell their royalty rights for a big upfront payment. Under their original record deal, the artist will be due a royalty from their label. The buyer of the royalty right acquires the right to receive those royalties.
Which means, had Durst sold the royalty rights stemming from his old Universal deals, the major would need to pay whoever acquired those rights. However, it turned out that Limp Bizkit’s members had sold royalty rights in relation to their publishing catalogue, but not their recordings. Once Universal was aware of this, it says, it paid over the millions in unpaid royalties to the band.
All of which means that Universal is not the evil anti-artist royalty-hiding corporation portrayed in Durst’s lawsuit. And that lawsuit should be dismissed, the major argues, not least because it isn’t in breach of contract, because it paid Durst the royalties he was due as soon as he was set up on its payment system.
There are other legal arguments too in Universal’s response, including that Limp Bizkit’s original record contract with indie label Flip Records - which then had a deal with Universal’s Interscope - says that disputes must be pursued through the courts in New York, and yet Durst filed his lawsuit in California.
Durst is also seeking to terminate his old contracts and to that end filed a ‘notice of rescission’ in September. As a result of those deals being terminated, Durst reckons Universal will owe him at least $200 million. However, says Universal, even if it had failed to meet some of the commitments in its contracts with Durst, recession is only possible if there is a “total failure” to meet those commitments. And it reckons that, having paid Durst millions in royalties, the musician can’t accuse it of that.
The lawsuit filed by Durst in September related to three separate deals involving Universal: the Flip Records deal, a direct deal between Limp Bizkit and the major, and a separate agreement in relation to Durst’s own label Flawless Records, which operated as an imprint of the major for a time.
Despite the massive success of Limp Bizkit back in the day - and a more recent resurgence on the streaming platforms - Universal insists that Durst only recouped on his old deals relatively recently, which means until then Durst’s royalties were paying off old advances and other recoupable expenses.
Durst’s people say that it’s hard to know if that is true because of issues with the major’s royalty reporting. Plus, of course, they also question why the major didn’t immediately start paying Durst once he had recouped.
On the complaints over Universal’s royalty reporting, the major says that this in itself is not grounds for breach of contract because Durst has “not alleged any damages” which is an important “element of a claim for breach of contract”.
