Capitol Owes Royalties On Digital Content, 9th Circ. Told

Former Missing Persons singer Dale Bozzio urged the Ninth Circuit Wednesday to revive her proposed class action claiming Capitol Records LLC failed to properly compensate musicians for digital content licenses, arguing that she is a third-party beneficiary to the contract between Capitol and the band.

A California federal judge wrongly dismissed Bozzio’s suit after determining that she had no binding claim on the royalties she sought, her attorney Cadio Zirpoli of Saveri & Saveri Inc argued. Bozzio adequately pled her status as a third-party beneficiary to the contract between EMI Group Ltd. subsidiary Capitol and Missing Persons Inc., the corporate entity representing the band, he argued.

“The court should look at the contract and interpret it in a light most favorable to the nonmoving party, which was my client,” Zirpoli said.

Bozzio claims that she attempted to obtain copies of the relevant royalty statements from Capitol, and it refused, saying the statements could only be provided to Missing Persons Inc. But the corporate entity was suspended in 1988; Capitol could revive the corporation, but has refused to do so, Zirpoli said.

He argued that as Missing Persons’ former frontwoman, and as past president of Missing Persons Inc., “she’s an intended third-party beneficiary; she has a separate right of action.”

Capitol’s attorney, Michelle Goodman of Sidley Austin LLP, said it’s not a foregone conclusion that Bozzio has a separate right of action under Missing Persons Inc.’s contract with the record company. “It’s a conclusory allegation — the court doesn’t need to accept those allegations,” she said.

Capitol originally had a contract with the individual members of Missing Persons, but later crafted a second agreement with the corporate entity, partly to make royalty payouts easier, Goodman said. If anything, Bozzio is only an incidental third party to the contract who has no right to sue, she said.

“Being a member of a corporation doesn’t make you a beneficiary to contracts with the corporation,” she said.

Circuit Judge Sandra Segal Ikuta pressed Goodman on those arguments, asking for case law that would prove Goodman’s point.

“Lots of cases say that a third party can sue,” Judge Ikuta said.

Goodman also argued that Bozzio should have asked Missing Persons Inc. for the royalty statements she sought, not Capitol, because that’s where Capitol has been sending them. When Judge Ikuta asked where those statements were going, given that the corporation had been suspended, Goodman said they were being sent to the address included in the contract.

Providing them directly to Bozzio could have opened the door for her to claim that Capitol had waived arguments regarding the corporation’s rights, Goodman argued.

Bozzio, who co-founded Missing Persons in 1980, filed suit in 2012, claiming that that EMI and several subsidiaries failed to properly pay their recording artists and music producers for income they received from licensing artists’ recorded music catalogs for sales of digital downloads, ringtones and streaming music.

Capitol argued that the case should be dismissed because Bozzio wasn’t a party to the record company’s contract with Missing Persons Inc. After that motion was filed, Bozzio amended her complaint, which Capitol again moved to dismiss. U.S. District Court Judge Yvonne Gonzalez Rogers dismissed the suit with in March of 2013, court records show.

Circuit Judges Morgan Christen, Sandra Segal Ikuta and Mary M. Schroeder sat on the panel for the Ninth Circuit.

The plaintiffs are represented by Robert J. Bonsignore of Bonsignore & Brewer, Joseph W. Cotchett, Steven N. Williams and Aron Kang-Hawa Liang of Cotchett Pitre & McCarthy LLP, and Carl Nils Hammarskjold, Travis Luke Manfredi, Guido Saveri, R. Alexander Saveri and Cadio Zirpoli of Saveri & Saveri Inc.

Capitol is represented by Sean Ashley Commons, Rollin Ransom and Michelle Beth Goodman of Sidley Austin LLP.

The case is Dale Bozzio v. EMI Group Ltd. et al., case number 13-15685, in the U.S. Court of Appeals for the Ninth Circuit.

–Additional reporting by Matt Fair. Editing by Mark Lebetkin.For a reprint of this article, please contact [email protected].

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