Blue Man Group Fights Music Director Over Royalties From Billion-Dollar Show

Blue Man Group founders Phil Stanton, Chris Wink and Matt Goldman - Getty-H 2016
Jemal Countess/Getty Images

A judge in New York is for now allowing Ian Pai, one of the early collaborators in the Blue Man Group, to move forward in a royalties lawsuit, but has also trimmed the claims and expressed doubts whether he can clear a statute of limitations hurdle.

In May, Pai filed a complaint that ripped Chris Wink, Phil Stanton and Matt Goldman — the three individuals who paint themselves blue and have been performing postmodern skits for a quarter-century. The Blue Man Group, first in New York and then elsewhere, has been unbelievably successful with box-office revenues in excess of $1 billion, but Pai claims to have been denied his fair share.

"This case involves an old story," states the complaint. "Gifted young and naive artist puts heart and soul into creating historically significant pieces of musical genius; unscrupulous parties in position to exploit that creative power befriend the artist, persuade the artist that they are a team, and that the artist should concentrate on his powers of creativity, and leave the business of making money from the music to them. The artist's work contributes significantly to the success of a billion-dollar business, and everyone gets rich except him."

Pai says that in 1989, he was good friends with Wink, Stanton and Goldman when the idea for the performance art show was conceived. A classically trained pianist who had also studied ballet and painting at distinguished institutions, Pai alleges he made significant creative contributions to the Blue Man Group and worked without pay for about a year and a half until the show opened in New York. In return, he allegedly was told that the Group would "take care of him" and that they "had his back."

Eventually, the Blue Man show became a success, and Pai says he was acknowledged as a composer or co-composer of some of the musical compositions in the show. According to the complaint, he was allocated an ownership share of 13.47 percent in the music, and Pai would also serve as music director for shows in Boston and Chicago and get a fractional percentage of box-office revenue there. This all added up to about $100,000 to $200,000 a year for more than two decades, but Pai believes it's not enough.

"Although Pai did not know it, the amount of the royalty payments he received over all those years were not calculated in accordance with the Ownership Allocation Agreement or the Music Director Agreement," states the complaint. "Pai learned this for the first time in May 2014."

With further allegations as to how the defendants concealed certain financials from him and misrepresented the health of box-office receipts, Pai is suing. He's represented by Robert Piliero.

There's breach of contract claims, of course, but Pai is also attempting to stick it to the Blue Men by asserting breach of fiduciary duty with damages estimated to be in excess of $125 million. There's also unjust enrichment and fraud claims with the potential for another $50 million.

In response, the Blue Man Group brought a motion to dismiss the complaint with an objection that Pai's asserted entitlement to royalties was "based on contracts he admits are not in writing and were not signed, and which are inconsistent with the one written agreement that does exist."

The defendants, represented by attorney Toby Butterfield add, "Pai’s brazen attempt to increase the amount he receives in royalties by alleging for the first time that he somehow did not understand what he was paid and why does not state claims in law."

On Thursday, New York Supreme Court Judge Barry Ostrager disagreed in part.

There are some issues the judge can't reach at the pleading stage like whether the terms of a supposed oral agreement are sufficient to survive the statute of frauds, but as to the Blue Man Group's fiduciary duties, Ostrager writes that Pai "has more than pleaded sufficient facts to defeat a pre-answer motion to dismiss based on the long relationship of the parties and the allegedly tireless efforts of plaintiff to advance the interests of Blue Man Group."

In the next breath, however, Ostrager writes Pai "cannot ignore the statutes of limitations" here and goes on to dismiss the fraud claim.

"In addition [of being duplicative of Pai's other claims], plaintiff had twenty years within which to raise questions with respect to the sums he was receiving from the defendants, and he failed to exercise appropriate diligence notwithstanding his allegations that the defendants promised to 'take care of him' and treat him fairly. If, as plaintiff alleges, he was entitled to significant royalties from thousands of Blue Man Group live performances, he was on notice that he was receiving less remuneration than he presently claims to be entitled."

In the decision (read here), Ostrager also points to Pai's Songwriter's Agreement as establishing that Pai "understood that whatever rights he had to the musical compositions written for Blue Man Group had value, and this circumstance and the totality of circumstances renders the maintenance of the fraud claim untenable."