Following A Fiery Controversy, Legal Issues Mount For Universal Music

A previously underreported fire at a California amusement park in June 2008 — and allegations of an ensuing coverup — could potentially upend the future of the world's biggest record company.

A massive New York Times Magazine investigation, written by Jody Rosen and titled "The Day the Music Burned," was published on June 11. It alleges that a blaze at a backlot of Universal Studios Hollywood — where Universal Music Group [UMG] stored many of its most artistically valuable materials in a 22,000-square-foot warehouse — destroyed hundreds of thousands of irreplaceable recordings and other materials made by and for many of the 20th century's greatest musicians, from Louis Armstrong and Duke Ellington to the Eagles and Tom Petty to Nirvana and Tupac Shakur.

The Times also alleges that in the aftermath of the fire, UMG intentionally sought to minimize and even misrepresent losses to the media and, by extension, to the artists signed to UMG and its subsidiary labels.

In the aftermath of the Times' investigation, lawyers are saying that "dozens" of major artists and musicians' estates are planning to file lawsuits against UMG. In a statement sent June 11 to NPR, the record company asserted that the Times investigation contained "numerous inaccuracies, misleading statements, contradictions and fundamental misunderstandings," but did not make any specific rebuttals.

At least two law firms in Los Angeles say that they are planning to represent major artists tied to UMG who now believe that their work was lost in the blaze. Attorney Howard King, of the firm King, Holmes, Paterno & Soriano, LLP, told NPR by phone on Tuesday afternoon that he is speaking to "dozens" of "marquee" artists and estates who are contemplating filing suits against UMG, but declined to identify any specific clients yet. King added that he plans to file initial suits as early as next week, and that they would be individual cases, not class-action suits.

King also said that his firm has repeatedly reached out to UMG and its chairman and CEO Lucian Grainge, asking for an inventory of the materials lost in the fire, but that they have not received any direct response.

On Wednesday, King and another attorney, Edwin McPherson of McPherson, LLP sent a formal request for that inventory to Grainge; the letter has been obtained by NPR. King and McPherson, who say that they are respectively representing "multiple current and former Universal Music Group artists," wrote: "The angst over the possible loss of irreplaceable intellectual property that [the artists] entrusted to UMG is palpable."

On Tuesday, a week after the Times published its piece, UMG staffers were sent an internal memo written by Grainge, which NPR has obtained. In it, Grainge pledged "transparency" to artists, writing: "We owe them answers. I will ensure that the senior management of this company, starting with me, owns this." (Grainge has been the head of UMG since 2011; in 2008, at the time of the fire, he was the chairman and CEO of UMG International, the music company's international division.)

In his internal memo, Grainge did not specify to staffers what materials, or how much, were either lost in or saved from the fire, nor did he give any specifics about irreplaceable masters, recordings that had not been commercially released, or other historically and musicologically valuable materials that may have been destroyed. He wrote instead, "All of the released recordings lost in the fire will live on forever." (In its statement, UMG struck a similar note, saying that the commercially available recordings stored in the vault continue to be available to the public in "master-quality, high-resolution" versions.)

But, Grainge added in this week's internal memo to his staff, UMG has been entrusted with "millions of assets in total," dating back over a century. Grainge then instructed any UMG employees who receive communications from artists about the fire to contact Patrick Kraus, UMG's senior vice president of archives and studios.

In an interview with Billboard published Monday, Kraus, who joined the company in 2015, said that he had never visited the California archives, except as a tourist going "to the Nickelodeon Splash Zone" with his kids before he worked at Universal. He also added that he didn't think that UMG "learned anything specifically from this particular event" of the fire, except that it was important to make sure that facilities were fire-protected.

In speaking to Billboard, Kraus also asserted, "Many of the masters that were highlighted as destroyed, we actually have in our archives — the Impulse [label's John] Coltrane stuff, Muddy Waters, Ahmad Jamal, [label] Nashboro Records, Chess Records ... Just in the last two days, we've found those examples in the archives."

UMG has been fully owned by the French media conglomerate Vivendi since 2006; last July, Vivendi announced plans to sell as much as 50% of the company, which in 2017 was valued at $23.5 billion. According to the New York Times' extensive investigation of the fire and its impact, UMG filed a lawsuit in 2009 against NBCUniversal — a separate corporate entity that owned the backlot, and from which UMG was renting the warehouse space. (The shared element of the two companies' names point to the tangled histories of entertainment conglomerates in the late 20th and early 21st centuries.)

In that 2009 suit, UMG sought damages for the losses sustained in the fire and alleging that NBCUniversal "breached their duty of care" at the site. In February 2013, UMG dropped the suit after the two companies settled for an undisclosed amount.

The Times alleges that in that suit's filings and in related corporate documents, UMG tried to maximize the extent of its losses — the exact reverse of its public stance. According to the Times, "UMG's accounting of its losses, detailed in a March 2009 document marked 'CONFIDENTIAL,' put the number of 'assets destroyed' at 118,230 .... In another confidential report, issued later in 2009, UMG asserted that 'an estimated 500K song titles' were lost."

However, as the Times points out (and as independent sources have told NPR), the vast UMG archives were in disarray well before the fire; in the Times' description, "The archive was huge and poorly organized, with thousands of tapes misshelved or improperly labeled. .... The inventory was ... kept on 5 X 7 cards, and the checkout system involved scrawled notes on three-ring binders."

The Los Angeles vault's head archivist at the time of the fire, Randy Aronson, gave the Times examples of material that arrived at the archive with little to no information about what they contained, including "Nirvana production masters with extra songs no one ever heard" and "Chess [record label] boxes that just said, 'Session.' " Aronson also told the Times that he managed to impose better order by the time of the fire, and that he had persuaded UMG to move many precious materials to a separate storage facility in Pennsylvania.

Even so, the Times alleges, somewhere between 120,00 and 175,000 master recordings were destroyed in the June 2008 fire. But given the disarray of many of the materials, it seems potentially impossible that UMG would be able to ever give an accurate and complete accounting of its losses.

Speaking to All Things Considered last Wednesday, Rosen speculated: "I think they [UMG] were especially concerned about the reaction of artists. I think a lot of artists would have felt betrayed, upset by the idea that this material that they prized was not properly cared for. It's not good for even a record company as powerful as Universal Music Group, which is the world's largest record company and today which owns more than 50% market share. But still, they don't want famous musicians mad at them and talking about it in the press."

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