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Published by Eriq Gardner

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Published by: Eriq Gardner on May 06, 2013
Copyright:Attribution Non-commercial


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 MAY 2, 2013
THE COURT ANNOUNCES THE FOLLOWING DECISIONS:Mazzarelli, J.P., Andrias, DeGrasse, Richter, Clark, JJ.9028Paul M. Ellington,Index 651558/10Plaintiff-Appellant,-against-EMI Music Inc., et al.,Defendants,EMI Mills Music, Inc.,Defendant-Respondent._________________________Scarola Malone & Zubatov LLP, New York (Richard J.J. Scarola ofcounsel), for appellant.Pryor Cashman LLP, New York (Donald S. Zakarin of counsel), forrespondent._________________________Appeal from order, Supreme Court, New York County (BernardJ. Fried, J.), entered October 11, 2011, which granted a motionby defendant EMI Mills Music, Inc. to dismiss the amendedcomplaint pursuant to CPLR 3211 (a)(1) and (7), deemed an appealfrom judgment, same court and Justice, entered December 7, 2011,dismissing the complaint (CPLR 5501[c]), and, so considered, thejudgment unanimously affirmed, without costs.
This breach of contract action was brought to recoverroyalties allegedly due under a December 17, 1961 songwriterroyalty agreement. The agreement designates the legendary EdwardKennedy Ellington, known professionally as Duke Ellington, andnamed members of his family (collectively Ellington) as the“First Parties.” A group of music publishers consisting of MillsMusic, Inc., American Academy of Music, Inc., Gotham MusicService, Inc., their predecessors in interest and any otheraffiliate of Mills Music are collectively designated as the“Second Party” under the agreement. EMI Mills is the successor-in-interest to Mills Music. According to the amended complaint,plaintiff is suing as Duke Ellington’s heir and grandson.This appeal calls for an interpretation of paragraph 3(a) ofthe agreement which, where relevant, required the Second Party topay Ellington “a sum equal to fifty (50%) percent of the netrevenue actually received by the Second Party from . . . foreignpublication” of Ellington’s compositions. This is known in themusic publishing industry as a “net receipts” arrangement bywhich a composer, such as Ellington, would collect royaltiesbased on income received by a publisher after the deduction offees charged by foreign subpublishers (
see e.g. Jobim v Songs of Universal
, 732 F Supp 2d 407, 413 [SD NY 2010]). As stated in2
plaintiff’s brief, “net receipts” arrangements were standard whenthe agreement was executed in 1961. Plaintiff also notes that atthat time foreign subpublishers were typically unaffiliated withdomestic publishers such as Mills Music. Over time, however, EMIMills, like other publishers, acquired ownership of the foreignsubpublishers through which revenues derived from foreignsubpublications were generated. Accordingly, in this case, feesthat previously had been charged by independent foreignsubpublishers under the instant net receipts agreement are nowbeing charged by subpublishers owned by EMI Mills. Plaintiff
asserts that EMI Mills has enabled itself to skim his claimedshare of royalties from the Duke Ellington compositions by payingcommissions to its affiliated foreign subpublishers beforeremitting the bargained-for royalty payments to Duke Ellington’sheirs. In dismissing the complaint, the motion court declined toread into the royalty payment terms any distinction betweenaffiliated and unaffiliated foreign subpublishers inasmuch as thecontracting parties themselves chose not to make such aAs also stated in plaintiff’s brief, “at source” agreements
have replaced “net receipts” agreements as the music publishingindustry standard since around 1980. Under an “at source”arrangement, royalty payments to the artist are based on thegrand total of earned music publishing revenue with all costs ofcollection absorbed by the publisher.3

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