Breaking Benjamin Dispute Lays Bare Dirty Laundry Behind The Scenes Of Record Label Deals

from the take-a-look dept

Last month, we posted an excellent video by entertainment attorney Martin F. Frascogna of the Fascogna Entertainment Law firm, deciphering some of the tricks of the trade in a standard recording industry contract, and showing how a band could still end up owing $500,000 even after selling a million albums. Most of that discussion was theoretical, as most record deals are kept confidential. However, due to a legal dispute involving the band Breaking Benjamin, that band’s full contract was filed as part of the court documents in the case (embedded below). We asked Fascogna if he’d like to analyze the actual contract, and he did us one better, and did a full analysis of the lawsuit itself as well. He also created a new video — embedded in the story, about the role of trademark for bands. Enjoy.

Breaking Benjamin?s internal struggle has left the group in shambles. I promise this will only get worse, but, in the interim, the dispute has me mildly wanting more. Chalk this up to the fact that I didn?t know people cared so much about the group, nor did I know they had so many albums out on the market, which is partially the cause of their internal problems to begin with.

Internal disputes are commonplace in the music industry, and honestly I?m thankful — otherwise I would be an unemployed attorney. Call it snooping but I decided to poke around into the vast 98+ page suit/band agreement/and recording contract. It?s a fascinating soap opera. The dispute is filled with villains, heroes, bad actors, flashes of comedic relief, and loads of drama. Before breaking down the intricate legal components, it?s important to first understand the players, potential players, and the significant roles each play.

Benjamin Burnley ? The group?s front man put the entire controversy in motion. Essentially, Burnley was under the impression he fired fellow band members Aaron Fincke and Mark Klepaski. Stated in their Band Agreement, any internal dispute would be handled via arbitration. If you don?t know what this means, arbitration is a method of settling disputes outside of court. This route is extremely common in the music industry because arbitration records typically remain private unlike court documents that can be publicly accessed. Burnley, via his legal counsel Brian Caplan and Jonathan Ross, requests to activate the arbitration clause in the band agreement and demands an award of $250,000. More on the amount later.

Aaron Fincke and Mark Klepaski, through counsel, James Oschal of Rosenn, Jenkins and Greenwald LLP, claim the Band Agreement is null and void therefore making an arbitration clause irrelevant. They request that the Pennsylvania state court hear the case and dismiss the validity of the arbitration clause. At this time, they are not seeking any monetary damages. Believe me that?s coming.

Hollywood Records ? Currently they are a non-factor but I promise they?ll become the star of this dispute in no time. Basically all the label wants is to release the album(s) allegedly agreed upon between the label and band. Sideline this thought for a minute as it will become a significant legal stance later on.

The time frame of events will also prove to be vital in this case.

• January 2009 ? Burnley, Fincke, and Klepaski enter into a Band Agreement.
• March 2010 ? Breaking Benjamin allegedly enter into a Recording Agreement with Hollywood Records.
• March 2010 ? Burnley allegedly communicates to band members, Fincke and Klepaski, along with the band’s attorney, Nick Farrara, that he didn?t want to proceed with the Recording Agreement.
• March 2011 ? Burnley dismisses Fincke and Klepaski from the band.
• June 6 2011 ? Burnley seeks arbitration and a remedy of $250,000 from Fincke and Klepaski.
• DATE UNCLEAR ON COURT DOCUMENTATION ? Fincke and Klepaski request a declaratory judgment from the Pa. State Court.

There three principal legal issues in the dispute:

1. Is the Band Agreement valid because the Band Agreement essentially dictates who entered into a contract with Hollywood Records? Meaning ? Did Breaking Benjamin as a collective group OR as Finckle and Klepaski acting as individuals and unauthorized representatives of the band sign the Recording Agreement.
2. Who owns the Breaking Benjamin trademark? The trademark dictates how the band proceeds with future recordings.
3. What happens to the Hollywood Records Agreement?
4. Bonus: Because label haters probably want me to dissect the Recording Agreement into a bloody carcass, due to the cyber-bullying and arm-pulling, I?ll reluctantly do so. However, I warn you that during this time of the legal dispute, the Recording Agreement is somewhat irrelevant as the Band Agreement and the Breaking Benjamin internal drama must unravel first.

THE BAND AGREEMENT:

Every major recording artist has an internal Band Agreement (if they don?t, they should). The agreement dictates how overall band business is handled in times of dispute, fund disbursements, etc. Courts traditionally look no further than the Four Corners Rule, meaning they only look at what?s taking place in the four corners of the legal document (i.e. ? Band Agreement) that the group collectively signed. Sometimes the group?s intentions allude to one conclusion but the actual language interprets otherwise. In the Breaking Benjamin Band Agreement, it?s unmistakably clear that Burnley started the group, is the creative force behind the group and essentially dictates the group?s decisions. Evident in the agreement, Burnley can dismiss a fellow band member for ?just cause.? This is interesting. This type of language is fairly standard in a ?Band Agreement? but not so standard in a ?Partnership Agreement.? These are two different agreements entirely. Some groups operate as a partnership, meaning each active member plays an equal role. For example if the group is made up of four members, each member essentially has a 25% stake and so forth. Here, through legal arguments stated by both sides, they use the language interchangeably ? Band agreement and Partnership agreement. If the document is indeed a Partnership Agreement, this entire dispute could quickly end because Fincke and Klepaski, acting as a majority vote, could enter into band decisions on behalf of the group without Burnley?s authorization. Oddly enough, this legal stance hasn?t been made nor does it appear it?s going to be. The big city attorneys must know something I don?t. Because we?re led to believe the group has entered into a Band Agreement (as opposed to a Partnership Agreement), the contract?s four corners language will run the show.

The contract clearly states that Burnley can dismiss members with ?just cause,? that disputes will be addressed via ?arbitration? and that any ?departed member has no right to ?ID Materials License Terms? nor shall they have the right to utilize the group trademark? as addressed in Section 5. Lastly, ?all decisions must be collectively made,? which makes it clear we?re dealing with a Band Agreement. A Partnership Agreement would allow for a majority vote, not collective. In addition, apparently back when the group was friends, there is some language anticipating Burnley?s poor health and slew of unstable disorders and how it could affect the band?s income stream. For example, the agreement would become invalid should Burnley decease or become disabled prior to any studio album completion. Personally speaking, this is where the drafter of the contract went wrong because they didn?t identify what happens if this clause is activated, rather it just states that the contract becomes null and void.

Because the agreement in place appears to be a Band Agreement (not a Partnership Agreement), (a) no departing member has rights to a trademark, (b) all band decisions must be decided upon by all three members, and (c) Burnley could dismiss members with ?just cause.? Therefore, since all three members agreed to these terms it appears (1) Burnley?s request for arbitration is valid, (2) Breaking Benjamin (as a group) didn?t enter into a Recording Agreement with Hollywood Records because Burnley, allegedly, didn?t agree to the terms, and (3) the dismissed members couldn?t enter into a Recording Agreement on Breaking Benjamin?s behalf because they weren?t authorized to make this decision.

WHAT HAPPENS TO THE TRADEMARK –

Because a band isn?t worth too much money if they don?t have a trademark, who will own the Breaking Benjamin trademark after this entire ordeal? For example, should it be Burnley, he could then hire new band members and continue touring, recording, promoting, etc. under the name Breaking Benjamin. Should it be Fincke and Klepaski, they may/may not be able to hire new members and keep operating under the name Breaking Benjamin without the group founder Benjamin Burnley. Trademark ownership is no joke because depending upon who legally filed for the mark (i.e. ? the name on the registration form with the USPTO) and what the agreements say about the rightful owner(s), somebody will have to stop using the mark. Trademark ownership essentially means leverage and control because whoever owns the mark has both. To explain this further, I’ve created this video, which breaks down why trademark is important to music professionals.

Section 5 of the Band Agreement states: ?Fincke and Klepaski hereby irrevocably assign to Burnley any and all rights, title and interest that Fincke and Klepaski may have in the band name ?Breaking Benjamin? as well as any and all logo(s) and/or trademarks in any manner collected thereto.? Therefore, regardless of how the court interprets the contract (i.e. ? Band Agreement v. Partnership Agreement), Fincke and Klepaski have assigned their rights to the Breaking Benjamin trademark to Burnley. Further meaning Burnley can be the only surviving member of Breaking Benjamin as Fincke and Klepaski, whether rightfully dismissed from the group or not, can NOT use the name Breaking Benjamin. If future albums are to be released, Benjamin Burnley must be on the album and must authorize the use of the trademark.

WHAT HAPPENS WITH HOLLYWOOD RECORDS?

The recordings being disputed are (1) a remake of ?Blow Me Away?, and (2) the ?Rarities? project. In order to be granted permission on these additional projects, Hollywood Records would have to secure the authorization of all the active members of Breaking Benjamin. Under this agreement, just as the previous Hollywood Records agreements with the group, Hollywood Records would be granted universal territorial rights with the recording, along with various other legal nuances such as trademark use, etc. Universe? Hollywood Records clearly anticipates a large expansion project. Oddly enough ?universal territorial? rights are somewhat standard, as this got started when some overly cautious attorney was concerned about radio signals being sent out into outer space and who would legally own the music. Yes, I?m serious. Personally, I like to protect my clients throughout the galaxy just in case there is some intergalactic distribution system established during my lifetime, but that?s neither here nor there….

The Hollywood Records contract proves pretty standard for a Recording Agreement. They scream big numbers, make grand promises, etc., all while the actual language of the contract slowly chips away at Breaking Benjamin?s potential income stream.

Just as my earlier video states, you?ll see huge reductions with recording costs (Section 5), Reserves deductions, Advances, etc..

Honestly, the amount being disputed, $250,000, could actually be $0, because Breaking Benjamin has yet to make money off the new recordings, rather than just racking up debt. Within the Recording Agreement, which was originally entered into by Burnley and Hummel (a former band member), then later amended to include Fincke and Klepaski, ?Hollywood shall NOT remix, edit, or materially alter without the BANDS consent.? This clause would leave one to believe Hollywood Records illegally released the new version of Blown Away, because they didn?t have the band’s consent; and because they didn?t receive authorization from Breaking Benjamin?s entire band (i.e. ? Burnley, Klepaski, and Fincke), they couldn?t release the ?Rarities? project. Clearly this is the end of the story, right? Wrong. I anticipate Hollywood Records is getting revved up.

Carefully drafted and tactfully scattered throughout the Recording Agreement, Hollywood has built in an insurance policy to assure they don?t get left out in the cold. Individually, these clauses may not mean a lot but you have to piece them together like a puzzle to see the major effect. The Recording Agreement, much like all major label agreements, has four really sneaky language elements that assures they?ll never get screwed over:

1. ?In our reasonable effort?
2. ?Unique Services?
3. ?Notice must be mailed?
4. ?Members will be joint and severally liable?

This doesn?t appear to be alarming on its face, right? Unfortunately all of these statements pack a heavy legal punch. ?In our reasonable efforts? is what?s referred to as cautious language. Let?s decode that statement to find its real meaning – ?we?ll try really really hard (subjectively speaking).? Apply this language to the Hollywood contract and they have essentially agreed to make their best efforts to agree to the terms with Breaking Benjamin. They may not have to fulfill the contract, but they?ll try really really hard. Ouch, this is getting shaky already.

How about ?unique services?? Contractually speaking, Hollywood acknowledges that the band is unique (i.e. ? there is nobody else in the entire universe like them). What a great stroke of ego for a band, but what this means is if the group can?t carry out their contractual obligations due to the fact that they are so ?unique,? the label will be unable to recover from such damages because they can?t find a comparable group which could mitigate the damages. Oh no, this is getting worse.

Perhaps the two silent killers come with the last two clauses. ?Notice must be mailed? means that if a group can?t perform their obligations, they must provide the label with a written notice. Here, based upon their previous contracts with Breaking Benjamin, Hollywood Records could take the stance that they were under the impression they could move forward on additional projects plus they were under the impression based upon Fincke and Klepaski statements that they could do so. Because no formal notice was mailed, no breach occurred. Right? It?s a legal argument, which may play out soon enough. Finally, buried in the contract Hollywood states that each member will be held jointly and severally liable. This means that if one party has done something wrong, they will all be held accountable. This alone will hang the group.

Breaking Benjamin has some tough times ahead. As the courts will likely determine Fincke and Klepaski were rightfully dismissed from the group, that?s also about the time Hollywood Records will come calling with their own suit about Breaking Benjamin. At least that?s what I would do if I worked as counsel for Hollywood. Unfortunately Burnley, Fincke, and Klepaski will have to reunite to defend the case. It?s beside the point who?s a member of Breaking Benjamin and who isn?t at that point, because in Hollywood Record?s eyes, authorization by one member means authorization by all. If Fincke and Klepaski agreed to the project, so did Breaking Benjamin. The group will be sued and then Fincke, Klepaski, and Burnley will once again turn to the Band Agreement to determine who?s paying who.

Filed Under: breaking benjamin, contract, record label
Companies: hollywood records