Week 14 - Contract to Court

CLASS 14 NOTES

FROM CONTRACT TO COURT: LEGAL DISPUTES IN THE MUSIC INDUSTRY.

TYPES OF DISPUTE RESOLUTONS, LEGAL ACTIONS, REMEDIES, CIVIL PROCEDURE, LITIGATION ATTORNEYS FEE AGREEMENTS

Below is a list of legal actions that often arise between musical artists, labels, and the companies and individuals that utilize music commercially:

1. infringement of copyright 

2. breach of contract (failure to pay royalties, signing a recording agreement with a second company when under exclusive agreement to the first, etc)

3. labor commissioner disputes between managers and artists

4. wrongful use of name and likeness

5. trademark issues

Due to the high cost of using attorneys to resolve these disputes in court, a variety of non-court dispute resolution methods are often used first, with court filing being the choice of last resort. The exception would be circumstances where a party needs to secure a court order (preliminary injunction) rapidly to prevent irreparable harm from occurring. Under those circumstances, an action must be filed in Court.

Here are various dispute resolution methods:

A. Negotiation between the parties themselves

The least expensive method. Unfortunately, due to the emotional nature of disputes, parties often are not able to communicate effectively to arrive at an agreeable solution. Better results can occur when two business representatives of the parties meet to try and resolve the matter. This requirement can be inserted into contracts.

B. Negotiation between the attorneys for the parties

More expensive, but much less so than court. Higher chance of resolution because the attorneys have a better handle on the likely outcome if the matter were to go to court, and can reason with their clients to fashion a compromise.

C. Evaluation by neutral party or attorney

Used primarily when the attorney or party desires an impartial opinion from someone not involved in the controversy to insure a balanced view.

D. Mediation by a hired third party

Increasingly popular due to lower costs than court action. Requires both parties to agree, accept, and pay a mediator who consults with each party separately. The mediator is often an attorney who has been specially trained in mediation and who attempts to craft a mutually agreeable settlement.

E. Arbitration by neutral party

Arbitration is similar to a trial, but without a jury or many of the formalities of trial. Can be less expensive, but is still an adversarial procedure requiring testimony of witnesses and presentation of evidence and briefs. Often contracts will specify Arbitration as the preferred method of dispute resolution to keep costs down.

F. Small Claims Court

Small Claims Court is for claims of $7,500 or less. No attorneys are permitted, parties only. The parties can present witnesses and bring documents. Matters are decided by the judge only, no jury. Very efficient process and judgment can be enforced like any other judgment.

G. Litigation in State or Federal Court

The most costly form of dispute resolution. Legal fees can range in the hundreds of thousands of dollars depending on the complexity of the case and duration. Outcome is always unpredictable at best, particularly if a jury trial is needed.

H. Issues in Every Litigated Case:

(1) Jurisdiction of the Court to Hear the Case

The court where the case was filed must have some basis for legal jurisdiction to hear the matter. If you are sued in another state and have no contacts with that state, it may be improper. Other defects involving jurisdiction include whether you were served properly, or whether the case should  have been brought in Federal Court and it was brought in State court.

(2) Statute of limitations

Every claim has an applicable Statue of Limitations or period of time within which an action must be filed or lost forever. The time period varies based on the type of claim.

(3) Ability of defendant to respond in damages

Since money damages are by far the most common relief sought, if a defendant does not have the ability to respond in damages, an expensive law suit is not usually a practical form of relief.

(4) Ability of plaintiff to prove facts of their case

Is there a written agreement that supports the plaintiff? Are the witnesses credible? Is there documentation to support the plaintiff’s version of the facts? All these elements are important in proving the facts at trial

(5) Legal causes of action

Every wrong does not necessarily have a legal remedy. Therefore, attorneys have to look at the facts and see what types of legal causes of action the Plaintiff can justify under the law based on those facts. Causes of action include breach of contract, torts or civil wrongs such as fraud, invasion of privacy, libel, and actions specified by statute.

(6) Costs of Representation

Even if the Plaintiff can afford representation, there should still be a cost-benefit analysis to determine whether the possible award of damages justifies the legal expense and Client effort.

I. Basic Steps in State and Federal Court Litigation

(1) Complaint and Summons

(2) Answer

(3) Discovery (interrogatories, depositions, requests for documents)

(4) Motions (summary judgment, etc)

(5) Trial (jury or judge)

(6) Judgment

(7) Appeal (loser posts bond)

Of all civil cases filed,95% settle and less than 5% actually go to trial.