05-04-2004, 08:32 PM
Join Date: May 2000
Location: Los Angeles, California
old Clifford Davis stuff
It's amazing the stuff you find on Google. This came up yesterday when I was looking for 'Christine McVie/contractual obligations' info--
The link is http://www.garyschuster.com/partners.htm#BM77
and here's the part that applied to FMac:
Decided just a week after Macaulay, Clifford Davis Management Ltd. v. WEA Records Ltd.74 involved Christine McVie and Robert Welch, both associated with the successful group, Fleetwood Mac. Davis had been manager of the group, during which tenure he had the writers sign separate music publishing contracts naming his management company as publisher. The contracts were similar to the one in Macaulay, although there were some relevant differences.75
After Fleetwood Mac split with Davis, they recorded an album of new songs. The record company, WEA Records, wished to release it in England. Davis sued to enjoin the release, claiming that his company was owner of the copyrights. Davis obtained an interim injunction, and the writers appealed. Their argument was that the publishing contracts and copyright assignments upon which Davis relied were invalid. Since relief from an interim injunction is an interlocutory matter, the writers could prevail merely by making out a prima facie case.
The writers won their appeal and the injunction was discharged. The court, in part echoing Macaulay, cited four factors indicating that there was inequality of bargaining power between the parties sufficient to justify refusing to enforce the publishing contract and copyright assignments:
The writers were bound for ten years, with no advances, while the publisher's only obligation was to use best efforts, a promise "of little use" to the writers.
Copyrights were to be assign for one shilling each, a consideration called "grossly inadequate".
The bargaining power of the writers was severely reduced because of the position they were in vis-ý-vis their manager/publisher. They depended on him to get their works published and performed. They also depended on him to manage their business affairs. "In negotiation they could not hold their own."
"Undue influences . . . were brought to bear on the composers by and for the benefit of the manager." The contracts were long and technical. They were standard forms and had not been subject to negotiation. The writers signed without the advice of counsel. The manager did not suggest that they seek counsel.76
For these reasons, the court found that the composers had made out a prima facie case on grounds of undue influence and restraint of trade against enforcing the contracts and copyright assignments.77
Unlike Macaulay , the Davis cases rests heavily on the theory of undue influence. This is no doubt due to the fact that the publisher was also the manager. Personal managers clearly have fiduciary duties toward their clients.78 The manager's first duty is to find the best deals for his client, and conflict of interest issues arise when a manager makes himself publisher.79
75. (a) The term of each was five years, with an option for the publisher to extend it at will for another five years. (b) Neither contract had a promise to exploit or a reversion clause, although McVie's contract had a best efforts clause. (c) Neither contract provided for advances against royalties. The McVie contract recited a nominal consideration of one shilling per song (a shilling is 1/20 of a pound). In the Welsh contract this space was left blank, but the court said it believed the same amount was intended.
76.  1 All ER 237, at 240-241.
77. As noted, the court allowed the writers' appeal and discharged the interim injunction. In so doing it noted that the "balance of convenience" also weighed in favor of discharge because defendants, WEA Records and certain record distributors, are "responsible concerns . . . ready to keep an account of their sales. If the publisher is right, he will be adequately compensated in damages." Id., at 241. It appears there was no appeal by the publisher; while the writers made out a prima facie case, the issues were never fully litigated.
79. Where a manager signs his client to his own publishing company, it is not a per se violation of the manager's fiduciary duty. The court will review the fairness of the contract in view of industry standards. The burden on the client is heavy, as he must show that the terms of the contract are not merely favorable to the manager/publisher but shocking to the conscience or so grossly different from industry norms as to be unconscionable. Croce v. Kurnit, 565 F.Supp. 884 (S.D.N.Y. 1982), at 893.
Just figured I'd share it with ya'll.