Royalties and the Law: The Informal Resolution Processes of the Three Domestic PROs - A Brief Analysis

Let's say: you're a writer-member of a domestic PRO and you have a complaint about a royalty statement or payment.

What do you do?

Well, each PRO has its own way to deal with such complaints. You can attempt to call an executive at your PRO to complain. But, if that informal phone call fails, you might have to try something else. What internal procedures do the 3 PROs have to resolve member complaints?

ASCAP: let us start with the biggest domestic PRO.

ASCAP has the most formal of the "administrative remedy-processes" of all PROs. The procedures are set forth, principally, in its ARTICLES and its Rules and Regulations, as well as in its Board of Review rules. You start by addressing a written complaint stating that you want to complain to the Board of Review and stating why you want to complain (this is called: the "Protest"). You send this to ASCAP's secretary, identified in their list of officers found on its website, (you should also cc ASCAP's lawyer, Vice-President Richard Reimer) usually by US mail or by personal delivery--or you can e-mail "the protest" to: boardofreview@ascap.com. Keep hard copies of anything you e-mail. Within a few days, your complaint is to be distributed to the secretary of the Board of Review and ASCAP's counsel (i.e., Reimer). A hearing is to be scheduled within a "reasonable time." ASCAP should send the complainant a copy of applicable rules for the hearing. You, the complainant have the burden of showing the error in the distribution. At the hearing, you can have a lawyer represent you (be sure they know something about the music business as well as ASCAP). ASCAP can also be represented by the lawyers and employees that they designate. Your complaint letter is treated like "your first shot." You can request "discovery" (to look at documents held by ASCAP)--nothing in the rules provides for things like depositions, a valuable tool often used in litigation of most civil matters. ASCAP can also ask for review of your documents. You have to show them what you intend to introduce at the hearing. The Board of Review determines if a request you've made to see evidence is proper. Although meetings to determine the complaint are held in New York, they can be held by teleconference, video conference or in person, or a combination. As such, it makes no logical sense to this author that hearings be held, physically in New York City. The hearing on the protest can be waived, as well. The hearing is supposed to be informal, but it would be wise to consider them as being a tribunal not unlike an adversarial legal arbitration proceeding. The evidence that may be allowed is up to the Board of Review (those members present or participating at the hearing) and doesn't have to conform to legal rules of evidence. There are rules for how the meeting may be conducted, which should be reviewed in detail, but consider that the Board may depart from such rules at your meeting. It is a good idea to take guidance from your legal counsel in the acceptance of what is said or represented at the hearing. ASCAP, in their own rules, encourages the protesting member to be represented by legal counsel (especially in certain proceedings of the Board when that person is a so-called "accused member"), a universally wise encouragement which bears repeating.

The meeting is purported to be confidential. The decision of the Board is purported to be final, but may be appealed to the AAA (the American Arbitration Association), purportedly the one located in the city of New York, but this may be superseded by federal law pertaining to arbitrations. The AAA rules then apply in those proceedings. Be careful in choosing the arbitrators who will rule on the appeal and investigate each prospective arbitrator. The AAA may reverse or modify the decision of the Board of Review. The AAA's decision is purportedly final; the protesting member has no recourse to the courts, according to the Articles, but that may run afoul of federal law on arbitrations. In protester Peter Myers's situation, for example, he filed an action in the Los Angeles Superior Court to overturn the decision of the New York AAA to whom he had appealed a decision in a protest he filed to ASCAP's Board of Review, which may seem improper, on the surface, but was based on federal case law on the subject of overturning arbitration decisions. Myers ultimately lost his Los Angeles case on appeal to the California Appellate Court for some reasons that are at best, perplexing. Despite Myers's situation, the decision of the California Appellate Court is not necessarily one to expect in another situation. Despite ASCAP's Rules and Regulations, it is the law and the courts that ultimately decide issues of venue and jurisdiction. This is yet another good reason to have a lawyer advise you who is knowledgeable about the music business, about ASCAP, and about the law, in general, especially on issues such as venue and jurisdiction.

Copies of the decision of the Board of Review may be obtained for free, on request, by any member of ASCAP. The copy may be redacted to extract confidential information as provided by the Rules.

BMI: does not appear to have any in-house dispute resolution procedures. The contract between BMI and a writer member or publisher member only provides that a dispute of any kind shall be submitted to the AAA in New York City for arbitration under AAA rules. The AAA award is purportedly final and binding and conclusive and may be confirmed by a judgment in the New York State Supreme Court (their trial court level) "or any other court having jurisdiction." This last part may warrant some consideration about California's jurisdiction over the matter, for example.

SESAC: in neither its publisher member contract nor its writer member contract, appears to have any procedure, internally, or informally, for resolution of disputes of any kind between the member and SESAC. The contracts merely provide, under the "miscellaneous" provisions that the agreement is to be construed under New York law (a matter, ultimately, of discretion for the judge who might decide the matter) and that all claims regarding the agreement are to be submitted to the exclusive jurisdiction of the courts of the State of New York or the federal courts in New York city (also a matter of discretion on the part of a judge looking at the issue).

It would be wise to consult an attorney with respect to consideration of any lawsuit against SESAC, as the issues are, in some respects, quite complex and subtle. Those issues pertain to matters of, technically, venue, jurisdiction and "choice of laws."

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This, therefore, has been a summary of the resolution processes of the three US PROs. Due to the shortened length of this article, all details of such processes could not be described, especially as some are unduly technical and filled with legalese. For further information, one should seek the services of an attorney knowledgeable about such matters for further legal advice and counsel.

Should it be necessary to consider taking action beyond the resolution processes described in this article, you should consider consulting an attorney. The author may, in a future article, consider the issues involved in an actual lawsuit against any of the domestic PROs, which pertains to aspects of subject matter jurisdiction, jurisdiction over the particular PRO by the specific court in which a lawsuit is to be filed, and proper venue in such specific court. All of these considerations are governed, ultimately, by the law as well as the terms and conditions of the contracts between the particular PRO and its member.

*******Caveat: all statements in this article are the opinions of their author and not intended as legal advice or counsel; no warranty or representation is made as to the accuracy of such statements. Should you desire legal representation, you should hire an attorney of your own choosing. For more information, you may contact the author privately. BRIAN LEE CORBER is an attorney practicing law in Los Angeles, California for nearly 30 years. He has been emphasizing music business matters since the late 1990s and follows the news in the music world, which is constantly changing, daily. He can be reached at CORBERLAW@aol.com*****