Kyla Asbury Apr. 29, 2014, 3:55pm

SAN FRANCISCO (Legal Newsline) - Warner Music Group Corp. has agreed to pay $11.5 million to settle a class action lawsuit that alleged the company failed to properly credit royalty payments to class members from the exploitation of digital downloads and mastertones of recordings under certain contracts.

The plaintiffs, including Sister Sledge, claimed Warner Music Group failed to provide proper royalty payments to them from digital downloads and mastertones.

The plaintiffs claimed the exploitation of digital downloads and mastertones should be considered a "license" instead of a "sale."

Warner Music Group U.S. labels include Atlantic Recording Corporation, Bad Boy Records LLC, Electra Entertainment Group Inc., Fueled by Ramen LLC, Nonesuch Records Inc., Rhino Entertainment Company, Warner Bros. Records Inc. and Word Entertainment LLC.

The claim form deadline is May 31. A final hearing is scheduled for Oct. 2.

To compensate class members for downloads/mastertones that have already been the subject of a royalty payment, Warner will make available $11.5 million for settlement, according to settlement documents.

Class members who timely submit a valid claim form will receive their per capita share of the fund payout based upon the percentage of revenue they generated from Warner for downloads and mastertones between Jan. 1, 2009, and Dec. 31, 2012.

The parties have stipulated that the total U.S. sales by WMG of subject masters as downloads and mastertones for the settlement class for the period is more than $381 million.

As defined by the class action settlement, "Royalty Rate Basis" means a calculation based on a percentage of the actual or adjusted suggested retail list price, published price to dealer or wholesale price. "Penny Rate Basis" means a calculation based on a specific cent rate per unit.

The settlement agreement allows counsel to make an application to the court for an award of attorneys' fees and costs, payable from the settlement fund, in an amount not to exceed $2.875 million and $150,000 in costs.

Warner Music Group denies the allegations but agreed to settle the class action lawsuit to avoid the cost and risk of trial.

The named plaintiffs were Debra Sledge, Joan Sledge, Kathy Sledge Lightfoot and Kim Sledge Allen, jointly doing business as Sister Sledge; Ronee Blakley; Simone Johnson Risko; Emlio Castillo; Mikael Johnston; and Gary Wright.

The plaintiffs are represented by Arthur Nash Bailey Jr., Nathaniel Christian Giddings, Michael D. Hausfeld, Michael Paul Lehmann, James J. Pizzirusso and Bruce J. Wecker of Hausfeld LLP; Raymond Paul Boucher of Kiesel Boucher Larson LLP; Nicholas A. Carlin, David M. Given and Alexander Hilary Tuzin of Phillips Erlewine & Given LLP; Bryan L. Clobes of Cafferty Clobes Meriwether & Sprengel LLP; Joshua Caleb Ezrin of Audet & Partner LLP; Don Alan Hernandez of Gonzalez Saggio and Harlan LLP; Douglas Lowell Johnson and Neville J. Johnson of Johnson & Johnson LLP; Paul R. Kiesel and Jeffrey Alan Koncius of Kiesel Law LLP; William James Newsom, Clifford H. Pearson, Alexander Robert Safyan, Aaron M. Sheanin, Bruce Lee Simon and Daniel L. Warshaw of Pearson Simon & Warshaw LLP; James Timothy Ryan of Johnson & Rishwain LLP; Richard Alexander Saveri of Saveri & Saveri Inc.; Leonard B. Simon of the Law Offices of Leonard B. Simon PC; and Michael W. Sobol of Lieff Cabraser Heimann & Bernstein LLP.

Warner is being represented by Tamerlin J. Godley and Melinda Eades LeMoine of Munger Tolles & Olson LLP.

U.S. District Court for the Northern District of California case number: 3:12-cv-00559

From Legal Newsline: Kyla Asbury can be reached at

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