Maverick Records brought its fight with Warner Music Group to Los Angeles superior court on Thursday, filing a breach-of-contract suit seeking millions in damages and the right to terminate their joint venture. As reported in Daily Variety, the suit comes a day after Gotham-based Warner Music filed what Maverick is calling a "preemptive action" in Delaware. The L.A. suit does not specify damages, but sources said Maverick estimates them at $200 million without punitives.
"To my recollection, this is the only time that a major record company has filed a lawsuit against its principal recording artist and has done it with this tactic of talking settlement and then filing a preemptive sneak attack in Delaware," said Maverick attorney Bert Fields. "Obviously, they believe that Delaware will be more expensive and inconvenient for Maverick, and I can understand why they would fear the verdict of a California jury and why they would want to run away for that."
Madonna and business partner Guy Oseary started Maverick as a joint venture with Warner Music in 1992. Maverick's successful artists include Alanis Morissette and Michelle Branch. With the joint venture set to terminate at the end of the year, what started out as an accounting dispute mushroomed into a lawsuit over the value of the company. Warner has an option to buy out Maverick's share, but the two sides are far apart on price.
Maverick sources said the company has generated $100 million in profits; Warner Music claims the label hasn't been profitable in years. Maverick sources also said the company has tried to buy out Warner's interest and has been rebuffed. The complaint seeks to terminate the buy-sell procedure in the joint venture agreement.
Although the dispute with Maverick has been brewing for a year, the lawsuits are now the responsibility of Edgar Bronfman Jr., who took over as head of Warner Music at the beginning of the month, after he and a private equity group acquired the company for $2.6 billion from Time Warner, which is also named in the lawsuit.
Maverick's complaint charges Warner Music with numerous breaches of the joint venture agreement, such as failing to provide marketing and publicity, forcing Maverick to shut down its Latin division before it was given a reasonable chance to succeed, improperly requiring Maverick to pay expenses of other Warner entities, and false accounting for receipts and expenses. Maverick also claims it was pressured into settling a Labor Commission claim by artist Branch even though it was "a transparent attempt to renegotiate her contract" because Warner wanted to preserve its relationship with her manager, who reps other artists. Further, Maverick claims that Warner Music Group reneged on an agreement not to treat as a loss an amount paid to Morissette when her contract was renegotiated.
In a statement, Warner Music Group said it "is simply seeking to affirm that the claims Maverick Records has been making against the company over the past year regarding the joint venture are baseless, unsubstantiated, and without merit. We look forward to resolving this issue so all parties can move forward with clarity."