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Sharing The Fruit But Claiming The Tree

detail of Bob Dylan's 1976 album 'Desire,' partially co-written by Jacques Levy.
photo by Flickr user Farther Along, licensed under CC BY

Only a tiny fraction of us still make our living from the land, but Anglo-American law has deep roots in agrarian history – which is why a lawsuit against music legend Bob Dylan may fail to yield much of a harvest.

Dylan was sued last month by Claudia Levy, whose late husband Jacques Levy collaborated with Dylan in writing seven songs that appeared on Dylan’s 1976 album “Desire.” The songs were included in the sale of Dylan’s catalog to Universal Music Publishing in December. Although terms were not disclosed, industry speculation has put the total price at $300 million or more. Levy also named Universal in the lawsuit.

Levy asserts that under – or perhaps more accurately, in spite of – the terms of her late husband’s 1975 contract with Dylan, his heirs are entitled to part of the sale proceeds. She also claims that Dylan and Universal systematically tried to subvert Levy’s share of the credit as well as the financial rewards of his work.

The contractual ground from which the lawsuit springs does not seem very fertile. The 1975 deal under which Levy co-wrote 10 songs with Dylan made Levy an employee who produced the compositions under a work-for-hire arrangement. This ordinarily means that Dylan would have sole ownership of the copyrights in the songs, just as a newspaper or magazine publisher holds the copyright to the articles produced by the publication’s staff writers in the course of their employment.

Sometimes such employees are paid a flat salary for their work – but not necessarily. There are many ways to pay employees. Some forms of compensation, like salaries or hourly wages, are fixed. Some, like bonuses, are discretionary with employers. And some, such as sales commissions, are formula-driven or rely on other performance metrics.

According to the lawsuit filed in the Supreme Court of New York state in Manhattan, Levy’s compensation was formula-driven: He was entitled to 35% of all income, including performance royalties, generated by the compositions. He was also entitled to receive credit as a co-writer. These terms gave him a financial interest in the copyright assets. But did the arrangement make him a co-owner of the assets themselves, and thus entitled to a share of the proceeds when the assets were sold?

The difference may seem subtle, but it is critical in many areas of commercial life. The law traditionally looks to an agricultural analogy.

Suppose I hire you to plant a tree in my yard, and we agree that you and your heirs will be entitled to 35% of the fruit yielded by that tree, in perpetuity. Maybe I give the sapling to my daughter, or sell it to my neighbor, a week after we plant it. Do your rights change? No. Whoever receives or purchases the tree takes my place in our deal. You and your heirs are entitled to 35% of the fruit whenever the tree produces some, regardless of who owns the tree. This gives you a financial interest in the tree, but it doesn't make you an owner.

In the Dylan case, the compositions Levy co-wrote – which included “Hurricane,” “Mozambique” and “Isis” – are the trees. The royalties and licensing fees they generate are the fruit. In many collaborations, Levy and Dylan would have been co-owners of the compositions, but they apparently agreed otherwise. Levy signed a contract making him an employee and the compositions a work-for-hire product owned by Dylan. How can his heirs now get around that agreement?

The lawsuit tries several approaches. Most directly, it says that despite the language in the agreement, it isn’t a work-for-hire arrangement at all. “The Agreement’s terms make clear that the Agreement is highly atypical of a work-for-hire agreement, bestowing on Plaintiffs considerable significant material rights and material benefits that are not customarily granted to employees-for-hire and that the label work-for-hire is, in this instance, a misnomer.” I don’t think the courts are apt to agree that the contract is not exactly what it says it is, absent a finding that Levy was somehow duped or abusively forced into accepting the terms.

Levy, who died in 2004, had a diverse and eclectic career, before and after his collaboration with the famed singer-songwriter. He directed several Broadway productions including “Oh! Calcutta!” and “Doonesbury: A Musical Comedy”; wrote lyrics for the stage version of “Fame” performed in London’s West End; practiced as a clinical psychologist; and taught English and drama at Colgate University. Arguing that he did not understand the implications of a work-for-hire arrangement and did not intend to accept one to work with Dylan is likely to be a heavy lift.

The lawsuit also notes that while Dylan reserved the right to sell his compositions, such sales would be subject “to the payment of compensation to Employee [Levy] as herein provided.” This, the suit claims, “means nothing less than Plaintiffs’ pro rata share of the Dylan Catalog Sale.” Dylan’s team will surely argue that it only means the new owner of the catalog, Universal, assumes Dylan’s obligations as owner of the titles. I expect the courts will see things the same way, perhaps with a ruling that discusses the distinction between trees and fruit.

What is the “pro rata share” to which Levy wishes to lay claim? The lawsuit takes the position that every song in Dylan’s catalog is worth an equal amount. That is akin to arguing that if a car dealership sells its inventory of 100 vehicles in a single transaction, the biggest and most loaded pickup truck is worth the same as the smallest, most bare-bones econobox. Levy’s lawyers undoubtedly know this argument won’t hold up but hope the case proceeds far enough for them to obtain nonpublic details of the deal via discovery.

To bolster their claims, and perhaps generate some sympathy for their client, Levy’s lawyers also assert a pattern of disrespect by Dylan and more recent misbehavior by Universal. One sore point – still sore, apparently, after more than four decades – is the purported omission of Jacques Levy’s name from the program and credits that accompanied the Dylan’s 1975 Rolling Thunder Revue tour, despite Levy’s contributions as both a writer and a director. This seemingly has nothing to do with the financial and contractual matters at hand. But business is conducted by humans, and humans have feelings and egos.

Bob Dylan is human too. At this writing, he has not commented publicly about the lawsuit, but his attorney Orin Snyder issued a press statement implying that the singer-songwriter is none too pleased.

“This lawsuit is a sad attempt to unfairly profit off of the recent catalog sale,” trade publication Billboard quoted Snyder as saying. “The plaintiffs have been paid everything they are owed. We are confident that we will prevail. And when we do, we will hold the plaintiffs and their counsel responsible for bringing this meritless case.”

If nothing else, the lawsuit allows the Levy family to bring their seemingly long-standing grievances against Dylan before a judge. But I don’t expect it to otherwise bear fruit.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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