UMG defeats rap duo Black Sheep's lawsuit over Spotify royalties

Nov 21 (Reuters) - Universal Music Group (UMG.AS) persuaded a judge in Manhattan to dismiss a proposed class-action lawsuit brought by rap duo Black Sheep that accused the label of withholding nearly $750 million in Spotify (SPOT.N) royalties from its musicians.

U.S. District Judge Jennifer Rochon said on Monday that the duo waited too long to bring much of its case and that it could not support its remaining claims that UMG unlawfully underpaid its artists.

Representatives for UMG, the rappers and Spotify – which was not a party in the case – did not immediately respond to requests for comment on Tuesday.

Black Sheep's 1991 album "A Wolf in Sheep's Clothing" sold over 500,000 copies in the U.S., and its best-known single "The Choice Is Yours" charted on the Billboard Hot 100. The duo signed a recording contract with Polygram Records, which UMG later acquired, in 1990.

Black Sheep's lawsuit from January accused UMG of unlawfully lowering its artists' royalty payments from Spotify as part of an "undisclosed, sweetheart deal" for shares in the streaming service in 2008.

According to the complaint, UMG revealed in 2021 that it owns more than 3% of Spotify's shares worth $1.7 billion, of which a "substantial portion" came from the 2008 agreement.

Black Sheep said that UMG broke their recording contract by underpaying their Spotify royalties based on the deal.

Rochon said on Monday that much of the duo's case was barred by a two-year statute of limitations from its contract with UMG.

The judge also said that Black Sheep could not support its remaining claims for underpaid royalties dating from 2021, finding in part that the contract gave the label "sole discretion" over how to distribute its music.

"Given this wide discretion, there is no basis upon which to find that UMG breached the contract by accepting a lower royalty from Spotify," Rochon said.

The case is Titus v. UMG Recordings Inc, U.S. District Court for the Southern District of New York, No. 1:23-cv-00015.