The music giant is being slapped with a lawsuit by George Gershwin's heirs for alleged misleading royalty statements and underpayment of royalties.
The heirs of composer George Gershwin have filed a $15 million lawsuit in a New York State Court against Warner Music. The heirs sued the music giant for the underpayment of royalties and other related discrepancies it has committed against the composer best known for his orchestral works "Rhapsody in Blue", "An American in Paris" and "Porgy and Bess".
The Gershwin heirs claim that Warner Music failed "to protect and preserve Gershwin's copyright interests both domestically and abroad" after they conducted their own audit back in 2007. They also discovered that since Gershwin's death in 1937, Warner Music subsidiaries had been exploiting his work.
Among the issues raised against Warner were an alleged failure to register copyrights in arrangements of his compositions with performance rights organizations in a timely manner, the way Gershwin's music and orchestrations have been rented outside the U.S. and Canada, the licensing of his ballets, as well as that of concert grand rights.
A latest audit report accounted for at least $4.4 million in underpaid royalties net of interest, yet more is owed following misleading royalty statements, a failure to monitor the activities of affiliates and abandoning territories including Asia and Australia.
The plaintiffs in the case alleged further that Warner took too much in deductions and allowed too many commissions from the net income they were contractually required to hand over to the Gershwins. They are seeking, through their lawyers Robert Caplan and Jonathan Ross, at least $5 million for breach of contract, $5 million for compensatory damages and another $5 million in punitive damages for breach of fiduciary duty.