Written on behalf of Feigenbaum Consulting
A recent claim against a French media company reveals the evolution of a claim by Spinal Tap Productions, a partnership of the four members of the “fictional” rock band Spinal Tap, who nonetheless perform as an actual band, selling out large concert venues and making significant album and merchandise sales.
The Lawsuit in Context
Essentially, the four members of the partnership are claiming $400 million in damages and that the company has committed several torts against them. The torts include:
- breach of contract;
- breach of good faith,
- accounting breaches; and
Overall, the accusations allege that, since the movie was released, the company has claimed revenues of less than $200 dollars, when in fact the revenues number in the tens of millions of dollars. The plaintiffs claim they have been wrongfully denied their right to 40% of total revenue they are entitled to under their contract.
The plaintiffs further claim that:
- the company fraudulently associated losses from unsuccessful business ventures with Spinal Tap Productions to cover company losses and to deny the Spinal Tap members their share of the spinal tap revenue;
- the company has refused to provide accounting statements and information on request and that they have abandoned trademark rights to the company by virtue of selling the company to another company and not filing a suit against an infringement on the name Spinal Tap;
- the defendants are attempting to retain creative control of the enterprise and denying the Spinal Tap members their fair means of profit to the brand.
The Hollywood Reporter sums it up as such:
The bulk of the complaint remains similar to the original version as the four Spinal Tap artists allege being given just $81 in merchandising income and $98 in music sales income over the last few decades, plus not receiving accounting statements in the past three years. They allege Vivendi has engaged in “anti-competitive and unfair business practices and has abandoned its obligations to enforce intellectual property rights,” and bringing contract claims, they are seeking to regain rights to the property and collect compensatory and punitive damages.
The Statement of Claim suggests that the company in question is not new to this sort of behaviour either:
This is not the first time that Vivendi has directed and engaged in fraudulent accounting involving its subsidiaries. In 2003, Vivendi paid $50 million and its former chief executive officer relinquished claims to a €21 million severance package to settle a civil fraud action that the United States Securities and Exchange Commission (SEC) prosecuted against Vivendi and its top executives concerning alleged financial fraud involving Vivendi’s subsidiaries.
The Broader Implications of this Claim
This case is significant in that it represents a major cultural phenomenon, the success and broad appeal of the Spinal Tap brand, and disputes regarding the rights to the profits from that brand.
The plaintiffs involved claim they are not concerned as much with the money as doing the right thing and bringing the company to task. Whether this is entirely true or not, it marks an interesting point in a major cultural institution that has helped define a generation through many popular catch phrases, promotions, attitudes and ideas.
Not unlike other news of celebrity bankruptcies and fraudulent misuse of funds, this lawsuit begs the question of the extent to which a creative brand should allow its focus on creative control and the creative process to allow it to overlook issues of business oversight and allocation of profit, and accounting of this. If the accusations are accurate, it would appear here that the company attempted to deliberately take advantage of the plaintiffs’ focus on the creative aspect and use its disassociation with the harder business aspects of accounting, corporate affairs, and business practices to its unfair advantage.
For instance, in the statement of claim, there is a recounting of a business meeting where the company asked one of the members about their interest in signing off a U.K. licensing deal to a small boutique firm. In fact, the small boutique firm turned out to be Metro-Goldwyn Mayer, one of the icons of the media world. Whether or not the term was meant as a facetious euphemism within the context of hard-line business negotiations in the company’s eyes is not clear, but one of the claims is breach of good faith, and the issue of good faith is a common thread in many cases involving communication between media executives and creative workers.
Mark Feigenbaum has extensive experience handling disputes involving high-profile actors, musicians, athletes and others in the sports and entertainment fields. Mark provides a wide range of legal, tax, and other related cross-border services to top athletes and entertainers in Canada and the U.S.
Contact us to learn how he can assist you with your legal or tax matters and provide you with comfort in knowing that you are in highly experienced hands. Contact Mark online, or at (905) 695-1269 or toll-free at (877) 275-4792 to book a meeting today.