Victory Records’ attempt to prevent the rock band A Day to Remember (ADTR) from releasing an album in the Fall of 2013 failed because it couldn’t establish the elements for injunctive relief under Illinois law.
In Woodard v. Victory Records, 2013 WL 5517926 (N.D.Ill. 2013), the defendant record company (“Victory” or the “Record Company”) sued to prevent the Florida pop-punk quartet from self releasing its Common Courtesy record.
The Court denied the Victory’s request to block the band’s album release.
To get a temporary restraining order, a plaintiff must show:
- irreparable harm,
- an inadequate remedy at law,
- a likelihood of success on the merits;
- the harm that will result if the injunction isn’t entered will outweigh harm to the opposing side if the injunction is entered. *2.
Victory established a likelihood of success on the merits. “This is not a high burden.” All the movant must show is a “better than negligible” chance of winning on the merits.
The crux of the dispute was the parties’ differing interpretations of the word “album” as it was used in the contract.
The Court found the term ambiguous and each side’s interpretation was plausible. ( *3). Because each side’s reading of the contract had facial validity, the Record Company demonstrated a better than negligible chance of prevailing on the merits.
Irreparable harm denotes “likely” injury that is “real” and “immediate”, not “conjectural or hypothetical.”
The movant has to show money damages would not adequately remedy the harm suffered without an injunction. ( *3).
Here, Victory couldn’t establish likely irreparable harm or an inadequate remedy at law because ADTR was a known quantity.
ADTR had released several successful albums under the Victory label. Because of this, Victory could gauge any lost profits resulting from ADTR’s independent album release.
This ability to extrapolate the album’s likely profits from ADTR’s prior sales meant Victory had an adequate legal remedy (e.g. a suit for money damages) for breach of the recording contract.
The Court also rejected Victory’s reputational harm argument – that if ADTR is allowed to self-release an album and the album is flawed and doesn’t sell, Victory’s reputation will suffer. The Court held that since ADTR was perennially successful and had a wide fan base, it wasn’t likely that ADTR would intentionally (or not) release an inferior music product. (*4-5).
The balance of harms element also favored ADTR. The Court applied a “sliding scale” analysis: the more likely a movant is to win, the less the balance of harms must weigh in the movant’s favor (and vice versa). (*2).
Here, the Record Company had a lost profits breach of contract remedy if the band breached the recording contract. In contrast, if ADTR was prevented from releasing its album with no end in sight to the underlying litigation, the band’s fan support could likely erode in an ultra-competitive industry (the music business) resulting in definite financial harm to the band. (*5)
Take-aways:
Victory Records illustrates that injunctive relief is difficult to get where the moving party has a clear legal remedy.
The Court found that past album sales provided a basis for lost profits and a sufficient legal remedy if the band breached the recording contract.