10:39am PT by Eriq Gardner
On Appeal, Universal Music Allowed to Escape Profits Dispute Over Drake Albums
A New York appellate court on Thursday reversed a ruling that previously allowed the company that first signed musical superstar Drake to pursue profits claims against Universal Music.
Aspire Music Group, co-founded by Lil Wayne's former manager Cortez Bryant, brought the lawsuit alleging that Cash Money Records and UMG Recordings are cheating a deal that entitled Aspire to one-third of net profits from Drake's first six solo albums.
Last July, New York Supreme Court Judge Barry Ostrager allowed the lawsuit to move forward. He rejected the argument that Aspire had waited too long to contest accounting statements.
But it was Ostrager's decision holding that Universal could be liable for the breach as an "alter ego" of Cash Money that an appeals court rejects as erroneous.
"Even assuming Universal was an 'equitable owner' of Cash Money, the complaint fails to allege that Universal's domination of Cash Money was used to commit a wrong against plaintiff," states the appellate opinion. "The complaint essentially alleges that Universal took advantage of Cash Money's cash flow problems by helping to satisfy millions of dollars of Cash Money's debts in exchange for control of Cash Money, and then, through such control, paid itself higher distribution fees, thereby reducing the net profits that plaintiff was entitled to receive under the Aspire/YME Agreement."
The panel of appellate justices continue: "These allegations describe legitimate business conduct; there is no indication that Universal engaged in this conduct for the purpose of harming plaintiff."
The complaint thus fails against Universal, although Aspire may beseech Ostrager to give them them another opportunity to articulate Universal's domination of Cash Money, the record label founded by Bryan "Birdman" Williams. Even if Universal escapes the litigation, Cash Money will still face claims of breaching the contract.