DFW Music News

Two Dallas Lawyers Teamed Up to Get Session Musicians $45 Million in Unpaid Royalties

Eric Zukowski (right) is a musician and lawyer who won a class action lawsuit that distributed $45 million for session musicians.
Eric Zukowski (right) is a musician and lawyer who won a class action lawsuit that distributed $45 million for session musicians. Chris Fritchie
Chastity “Chaz” Marie was fresh out of high school when she and her sister Stephanie got hired as background singers on country superstar LeAnn Rimes' album Sittin’ On Top of the World. The Texans were living in Nashville as songwriters in the late '90s and were known as the singing duo the Marie Sisters. Their sound was then considered contemporary country music.

Like Rimes, Chaz Marie had been born in another state, Mississippi, but quickly found herself in Texas at an early age. She'd come from a musical family. Her mother sang for a band called The Singing Pages and opened for Hank Williams, and her father was a preacher. The Marie girls sang in church every Sunday and grew up with Rimes on the Texas opry circuits.

After their background singing experience with Rimes, the Marie Sisters would go on to sign with Universal/Republic Records in early 2002. In June of that year, they released their self-titled debut, which received positive reviews; their song “Red Bad Blood” peaked at 46 on the Billboard country charts.

But bad management, Chaz Marie says, led to them breaking up. Her sister went into the medical field while Chaz continued singing with her own band. She’d go on to work in the studio and on tour with artists such as Kenny Rogers, Wynonna Judd, Richard Marx and the Tejas Brothers. A seasoned studio professional, Marie didn’t think much about earning money off the LeAnn Rimes recording. At the time, she and her sister had been paid a small amount for their studio time.

“We didn’t know anything about royalties and had never been a union member [with the American Federation of Musicians],” she says. “I don’t see the point. [Texas is] a nonunion state.”

Twenty years later, Marie was doing a private gig with her friend, Texan singer-songwriter Jon Christopher Davis, at the Sheraton Hotel in McKinney, when he pulled her aside and asked whether she’d spoken with Eric Zukoski, a musician who daylights as a Dallas-based attorney focused on intellectual property. He frequently represented financial institutions but has also been known to do work for musicians.

Marie had known Zukoski for a long time. He’d been her attorney and played bass for her in the past. She learned from Davis that he’d gotten another musician friend a substantial amount of money that he’d been owed by the Screen Actors Guild-American Federation of Television and Radio Association (SAG-AFTRA) Intellectual Property Rights Fund, which the American Federation of Musicians (AFM) had created in 1998 to pay royalties for musicians and singers. The fund, according to a February 2018 lawsuit, had been set up to fulfill two purposes: to receive the royalties from SoundExchange, the sole entity assigned to distribute the money for featured and non-featured performers, and to collect royalties from any other entity that collects and pay those royalties and remuneration to eligible performers and non-featured artists.

The royalties were based upon three laws: the Audio Home Recording Act of 1992, the Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998. The latter two amended the original law to guarantee non-featured musicians will receive a small percentage of royalties from a digital media or recording.

“Absence of this right was the reason you would see legendary Motown artists would be penniless if they didn’t write the song,” Zukoski says. “... I kept plugging away and just never met anyone who got the royalty or even knew about it.”
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Chaz Marie (middle) is a Texas artist who sued AFM & SAG-AFTRA for owed royalties.
Tiffany Bass

Chaz was one of these people, as were Jon Blondell, Paul Harrington, Timothy Johnson and Clayton Pritchard, all of whom were owed thousands of dollars in royalties and planned to join Zukoski’s class-action lawsuit, which he filed with the help of Roger Mandel, a Dallas-based attorney who specializes in class-action lawsuits.

They filed a class action against AFM President Ray Hair, who had been serving for 10 years and was also a trustee, and five other trustees who were in charge of making sure that they distributed money to union and nonunion members alike. Instead of distributing the money, the lawsuit claimed, they were “sitting on” about $45 million that hadn’t been distributed.

“We sued to change the procedures, fix their practices and distribute what they had on hand, what had been built up for 10 years,” Zukoski says.

The lawsuit was settled in late October 2020. with final approval of the class settlement occurring in late June, after the trustees made sure the money was distributed to the thousands of musicians who were on their unclaimed list. They had to ensure both union and nonunion members were getting paid, but also established a better framework for distribution. Until then, the system seemed to be that money would be retained until someone decided to claim it.

Stefanie Taub, who declined to comment, took over as CEO of the AFM & SAG-AFTRA fund a couple of months after Zukoski and Mandel filed the class-action lawsuit. Prior to that she served as a trustee of the fund for about six years.

Now Zukoski and Mandel are trying to spread the word to let other non-featured performers know that they may be owed money too.

“Hopefully, their marketing efforts in the future will make more session musicians aware of this fund and go collect their money,” Mandel says. “Part of the reason we wanted to publicize the results of the settlement is because it’s another opportunity to get the word out to these folks who might now still be entitled.”

It all started with a phone call from a renowned harmonica player. Paul Harrington, who lives in Rockwall, had contacted Zukoski a few years ago to find out about royalties he believed he was owed.

Harrington had played on Pitbull’s “Timber” song in the mid-2010s and, Zukoski says, came up with the hook of the song, which is part of the reason he says it was such a big hit. The song was everywhere. You'd hear it at Dallas Cowboys games, on the radio, on TV.

“That’s kind of a testament to his talent,” Zukoski says of Harrington.

The Observer couldn’t reach Harrington for comment.

After contacting the fund, Zukoski received some paperwork that showed Harrington was owed money and eventually received a five-figure check for the musician.

“At that point I realized there is a much bigger problem and made some informal attempts to get the funds to change its ways because people aren’t being paid, but I ran into a brick wall,” Zukoski says.

He wasn’t familiar with class-action lawsuits, but came across Mandel, whom Zukoski calls “the preeminent class-action lawyer in Dallas.” Mandel says he has won and settled many class-action lawsuits in the past since it’s often cheaper for the defendants to go that route rather than risk a jury trial. He’s been named a “Texas Super Lawyer” for several years by Texas Monthly and listed in the Top 100 Trial Lawyer and Top 25 Class Action Trial Lawyer lists by The National Trial Lawyers organization since 2013.

If anyone could get Hair and the other trustees to fix the broken system, Mandel would. As part of Jeeves Mandel Law Group in Dallas, he’s been taking on giant corporations for 25 years in cases over consumer insurance, securities and breach of fiduciary duties.

Mandel says his passion lies in helping ordinary people get justice in cases of abuse by large corporations. In this case, the ordinary people were the non-featured performers.

Mandel and Zukoski discovered that the fund was sitting on an undistribued $45 million, mostly allotted for non-union, non-featured performers, they say. In late 2017, they filed a lawsuit against Hair and others and amended it in early February 2018.

“They didn’t care if non-union people got paid and didn’t do a good job for union people,” Mandel says. “... The trustees had breached their fiduciary duties by not identifying non-union performers and not adequately distributing the money. I thought it was a perfect class action because basically they were breaching everybody and doing a terrible job.”

According to the early February 2018 lawsuit, after the digital laws passed in the ’90s, performance royalties became payable at 50% to copyright owners of the sound recordings, 45% to featured artists, 2.5% to non-featured musicians and 2.5% to non-featured vocalists.

Mandel and Zukoski pointed out in the lawsuit that SoundExchange, as the representative of the copyright owners of sound recordings, and the AFM had appointed a fund to receive royalties from SoundExchange and distribute them to the non-featured musicians. But SoundExchange took the position that its only obligation was to remit the royalties to the fund but it had no obligation to audit or ensure that fund trustees, three of whom were from the SAG-AFTRA and three from AFM, were paying those royalties.

“This has left the trustees free from any oversight over the payment of royalties pursuant to (…) the trust agreement,” Zukoski wrote in the lawsuit. “Each year thousands of sound recordings are digitally performed, and each year SoundExchange collects royalties on thousands of songs, which royalties are remitted to the fund. Tens of thousands of non-featured performers perform on those sound recordings which are digitally performed each year.”

It seems the trustees had a greater success rate at distributing royalties to non-featured performers who belonged to the AFM union, according to the lawsuit, because they had made arrangements with the unions and assisted them with their identification efforts to receive their royalties.

“For non-union, non-featured performers, the trustees have not attempted to make arrangements with entities that could systematically collect such information regarding non-union, non-featured performers and provide it to the fund,” Zukoski wrote in the February 2018 lawsuit.

The situation had gotten so bad that the fund was researching and distributing royalties years behind schedule, they say. Zukoski says that there was a rule that if the funds weren’t collected by non-featured performers in 60 days, the money reverted back to the fund. “But they say they weren’t going to keep it,” he adds.

The trustees also had an Unclaimed Royalties List that contained thousands of non-featured performers who couldn't be paid because the fund didn’t have their Social Security numbers or taxpayer identification numbers. Yet the fund had their contact information but never contacted them, according to the lawsuit.

Zukoski says that the fund could have contacted the record label, producer, featured artist or featured artist’s management because one of them would have hired and paid the non-featured performer for their work and would have payroll and IRS records available.

The lawyers also argued that the trustees failed to engage in a reasonable, good faith marketing campaign to alert the thousands of musicians on the unclaimed royalties list that they were owed about $45 million, which is the sole purpose for the fund’s existence, according to the lawsuit.

“The failure ... cannot be considered anything other than a bad faith refusal to pay royalties by the trustees,” Zukoski wrote.

Chaz Marie blames Hair, who’s been serving as the national president of the AFM for 10 years.

“The union was set up to protect everyone,” Marie says.

A couple of years ago, Hair had approached Marie's husband, guitar tone king Quinten Hope, Marie says, and went off on him about Marie being part of a class action lawsuit against Hair. She questioned how he could let this happen under his watch.

“He got busted, got caught doing something bad,” Marie says. “We did get a big settlement out of it. No musician shouldn’t have to be paid.”

The Observer contacted Hair, but he refused to discuss the issue. “I’m not dignifying their comments with a response,” he said, twice. “I will not dignify their comments with a response.”

Instead, Hair told the Observer to contact the CEO of the SAG-ATFRA fund to discuss what happened, why it happened and what’s been done about it.

Taub declined to comment.

The royalty payments began arriving during the COVID-19 pandemic when millions of musicians were out of work, Marie and Zukoski say.

“They didn’t care if non-union people got paid and didn’t do a good job for union people.” — attorney Roger Mandel

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“What makes us proud is the money was distributed during COVID," Mandel adds. "For musicians who could no longer gig and who couldn't do studio work it was a real blessing."

Deadline reported in April 2021 that some 500,000 session musicians and background singers like Marie were sharing more than $70 million in royalties that hadn’t been distributed. The publication called it “the largest distribution in the fund’s history.”

Sidney Kibodeaux White, the fund’s chief operating officer, told Deadline: “Every year, we’ve been able to collect more revenue on behalf of our participants. Given the enormous impact the pandemic has had on the ability to earn a living on both instrumentalists and vocalists, we are thrilled to be able to assist non-featured performers by collecting and distributing royalty income they might not know they’re entitled to receive. Unlike other rights collectives, there is no membership or registration requirement in order to qualify — as long as a musician participates as a non-featured performer on a covered sound recording, that musician is considered a ‘participant’ for distribution purposes.”

What she failed to mention was that the year before, in March 2020, they had settled Zukoski and Mandel’s class action lawsuit, which Mandel said required them to change their practices.

According to the March 2020 settlement agreement, “as a result, the Fund will be paying 100% of those Unclaimed Royalties from 2011 to 2016, over $45 million, to over 60,000 Class members by April 30, 2022. In addition, the injunctive relief will ensure that a much higher percentage of over $150 million in royalties collected from 2017 to 2019 will be distributed to the NFPs to whom they are owed and will ultimately be paid out 100% rather than held indefinitely by the Fund as occurred in the past. This represents recovery of 100% of the monetary relief Plaintiffs sought and potentially could have recovered.”

Taub claimed that the $70 million distributed in April 2021 wasn’t part of the class action settlement, but it’s hard to argue that the distribution wasn’t indirectly affected by the class action lawsuit. Mandel says the fund’s trustees had to take specific steps to identify, locate and pay non-featured performers as well as hire a management consultant to revamp their business and hire a marketing consultant to get the word out to all these unpaid musicians.

According to the June 29 declaration of Stefanie Taub, “the fund has taken all steps necessary to comply with the Settlement Agreement.”

In late April, the fund distributed nearly $3 million that was owed from 2011 to more than 13,000 artists; $3.5 million from 2012 to 13,761 artists; $7.7 million from 2013 to 15,846 artists; $9.6 million from 2014 to 14,605 artists; $10.2 million from 2015 to 16,712 artists and $10.6 million from 2016 to 17,921 artists, Taub wrote in her late June declaration.

“Ultimately, they did the right thing and distributed this money,” Zukoski says. “They distributed every penny they had on hand and agreed to procedures going forward to make sure they distribute the funds.”

In some ways, this lawsuit was personal for Zukoski. He’s played on two full-length albums as a session bassist for a multi-CMA and Grammy winner, on recordings with two Blues Foundation Award winners and on dozens of radio and TV recordings. He’s also the former president of The Texas Music Project, a nonprofit that helps raise funds for music education programs in Texas.

“As a player, I’d never met a single music colleague who had been paid the royalty and not a single one knew about it,” he said. “Our goal was to make sure they get paid as musicians and to be aware that they were entitled to money.”

Marie was elated when the trustees agreed to the terms of the lawsuit, She says she couldn’t believe it and was happy to receive the money when it arrived.

“I’m glad I got involved in it,” she says. “Yes, we got them, and not that we want to shame someone, but Ray made his own choices and put bad stuff out there, and it comes back to you. Karma is a bitch.”
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Christian McPhate is an award-winning journalist who specializes in investigative reporting. He covers crime, the environment, business, government and social justice. His work has appeared in several publications, including the Dallas Morning News, the Fort Worth Star Telegram, the Miami Herald, San Antonio Express News and The Washington Times.