Peggy Lee's Class-action Suit Settled

A Los Angeles Superior Court judge has approved a settlement of singer Peggy Lee's class-action lawsuit against Universal Music Group (UMG), MCA Records, Decca Records, and Universal Studios, clearing the way for the payment of $4.75 million in royalties to Lee and other former Decca artists.

Lee filed her action in December 1999, alleging breach of contract, fraud, and breach of fiduciary duty (Billboard, Jan. 8, 2000). The pop vocalist, who was signed to Decca from 1952 to 1956, claimed that she and other unnamed acts signed to the label from 1950 to 1960 had been underpaid—by approximately $5 million collectively—from 1995 to 1999. (In 1966, Decca merged with MCA Records, which is now part of UMG.)

Lee alleged that Decca calculated her royalties on the basis of "artificial prices," that royalties were reduced on free goods, that Decca failed to report all sales of cut-out product, and that Universal did not issue royalty statements in the year prior to the filing of the action.

On Jan. 14, Judge Victoria Gerrard Chaney approved what she termed a "fair and reasonable" settlement stipulation executed Dec. 18, 2001, by attorneys for Universal—which did not admit to any wrongdoing in the case—and Lee.

Of the $4.75 million settlement amount, at least $2 million is earmarked for claims that UMG did not pay royalties when due, $1 million for claims that royalties were improperly calculated, and $500,000 for claims that UMG took unauthorized packaging deductions.

Under the terms of the agreement, the settlement will be paid out of an escrow account to Lee and others in the class action, comprising artists who recorded for Decca prior to 1962. The estates of Bing Crosby and Buddy Holly, which are engaged in separate royalty-related cases with UMG, are not covered in the settlement.

Members of the class action must be notified of the settlement by March 8, and the court is to receive a list of names and addresses of the artists by March 15. If they intend to opt out of the settlement, class members must notify the court by April 23.

In addition to mandating the payment of the monetary settlement, the agreement amends the affected artists' contracts to address royalties on CD sales. No special provisions are made in the settlement for the online distribution of the recordings.