Virgin/EMI Wrongfully Attempted To Poach Hawthorne Heights From Victory Records, Lawsuit Claims
Virgin/EMI improperly induced platinum-selling band Hawthorne Heights to repudiate its contract with top independent label Victory Records, according to a lawsuit filed by the independent company in federal court Monday.
Virgin/EMI went so far as to pay $55,000, which the band used to fund the initial phase of a 2006 lawsuit against Chicago-based Victory, and also assisted Hawthorne Heights in its search for a music-industry litigator, the lawsuit states.
"The facts alleged in this case demonstrate classic interference with contractual and business relations," said Robert Meloni, a partner in the New York law firm Meloni & McCaffrey, representing Victory. "They did more than merely offer a carrot to the band, but also saddled the horse, paid for a rider to take the reins, and led it out of the barn."
The suit, filed in federal court in the Southern District of New York, seeks $10 million in compensation and $25 million in punitive damages for Virgin/EMI's "willful, wanton and deliberate conduct."
The lawsuit describes the alleged tactics employed by a major music company to poach a band after an independent music label's investment has made the band wildly successful.
Victory entered a four-album deal with the band in 2003 when Hawthorne Heights was an unknown band playing small venues in the Ohio area. The band subsequently recorded two studio albums: "The Silence in Black and White," which sold more than 1 million copies through Victory's substantial financial investment and aggressive and savvy marketing efforts; and "If Only You Were Lonely," which sold about half as many. The band remains obligated to deliver two more albums to Victory within a "reasonable time" during the remainder of the contract term, according to a May 16, 2007 federal court ruling in a separate action filed by the band against Victory in the U.S. District Court in Illinois. Despite that ruling, the band has vowed that they will not record for Victory, the suit filed Monday says. It has been two years since the band delivered an album to Victory.
The group's public announcement in August 2006 that it would no longer record for or work with Victory and the ensuing controversy -- along with a "shock and awe" legal and public relations campaign against the label and its founder, Tony Brummel -- drove down the sales of the second album, the suit says. As a result, retailers have returned more than 500,000 copies of the second album to Victory, which suffered "millions of dollars in damages for returned product alone," the lawsuit alleges.
The lawsuit describes the actions of three executives, all of whom remain with EMI. Director of A&R David Wolter first met with Hawthorne Heights' business advisor and lawyer, Daniel Friedman, and then brought in Virgin's Vice President of Business Affairs Jeffrey Kempler who "had experience in extracting bands from other independent labels," the lawsuit says. "Kempler also had an ax to grind with Victory, and Brummel in particular, as a result of past unrelated dealings with Brummel when Kempler was Senior VP of Business and Legal Affairs at Universal's Island Def Jam record label."
"Kempler then spearheaded a campaign to cause the Band to terminate the Victory Agreement and sign with Virgin Records/EMI. The first step was for Kempler to find and indoctrinate a litigator on behalf of the Band. The second step was for Virgin Records/EMI to fund the contemplated litigation needed to free the Band from its contract with Victory," the lawsuit says.
The lawsuit alleges that Victory believes "both Kempler and Wolter reported regularly to Jason Flom, Virgin's CEO, and kept him fully informed as they proceeded with each step of their plan to poach the Band from Victory."
After filing suit in Illinois federal court against Victory Records, the band posted a "manifesto" against Victory on their website and relentlessly attacked Brummel. This was "intended to put Victory on the defensive … so that Victory would be forced to submit to the Band's extortionate demand for an uncompensated release from the Victory Agreement," the suit says.
Though the band never recorded for Virgin/EMI for unrelated reasons, the lawsuit notes that "the Band's relationship with Victory has been irreconcilably cloven" and the damages to Victory had already occurred due to the actions of Virgin/EMI.
In January 2007, EMI merged its Virgin and Capitol record labels and formed the Capitol Music Group. EMI was recently acquired by private equity group Terra Firma. The new EMI has emphasized its interest in working more cooperatively with the independent record label community and increasing its investment in A&R, an area where successful independent record labels like Victory are seeing great success.
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