New York Court Overturns TVT Decision

New York's Second Circuit Court of Appeals today (June 14) overturned an earlier court's decision in favor of TVT, in the indie label's suit against the Island Def Jam Music Group, Universal, and former IDJ (now Warner) executive Lyor Cohen. For those keeping score, what was once an award for TVT of more than $130 million now stands at $126,000.

Universal issued an immediate statement: "This is the result we expected all along. We are pleased that the Second Circuit viewed the case as we did." And from Lyor Cohen's lawyer, Matthew Dontzin: "We are delighted but by no means surprised by the court's ruling, fully vindicating Mr. Cohen's position on this matter from day one. In reversing the findings of liability, fraud and the related damages, the court has specifically found that there was no credible evidence to support the outrageous claims against Mr. Cohen."

TVT could request the entire panel of Second Circuit judges for a rehearing or petition the U.S. Supreme Court for review. A statement released by Peter L. Haviland, TVT's trial lawyer, made it clear that was their planned response: "TVT Records will appeal the reduction in the damages award. We were forced to bring this action in part because Mr. Cohen and Def Jam denied the existence of a contract critical to our business. This court has affirmed that we did have a contract and that the defendants broke it. This is not over, and we look forward to the next round."

The decision marks yet another turn to a saga that began in 2002, when TVT alleged that Def Jam Records blocked the release of a TVT album featuring rapper Ja Rule and producer Irv Gotti. In May 2003, a federal jury in New York ordered Cohen and Def Jam to pay TVT $24 million in compensatory damages after finding the defendants liable for fraud, interference with contractual relations and copyright infringement. Def Jam was ordered to pay an additional $52 million in punitive damages, while Cohen was personally ordered to pay $56 million in punitive damages. In September of 2003, the punitive damage award was reduced to $3 million against Cohen and to $24 million against Def Jam. Compensatory damages were upheld.

The Second Circuit decision released Cohen and Universal from liability, except for $126,000 for a breach of contract claim that Island Def Jam and Cohen did not appeal. "TVT's claims for tortuous interference and for fraudulent concealment fail for lack of a legally sufficient evidentiary basis," concluded the Circuit judges. The Court also ruled that TVT was not entitled to its copyright infringement claims, accordingly reversed findings of liability and set aside awarded damages, and, finally, determined that punitive damages were not recoverable where "the wrongful conduct is not directed at the public at large."

-- additional reporting by Brian Garrity, N.Y