FAIR Act to Repeal California’s ‘Seven-Year Statute’ Amendment Fails in State Senate

The major record companies won when the Free Artists From Industry Restrictions Act (FAIR) failed to walk out of the California State Senate Judiciary Committee Tuesday (June 28) in Sacramento.

The Fair Act, also known as AB Bill 983, received four votes, two of the six needed to obtain a majority from the 11-member committee. The bill was the latest attempt to repeal a 1987 amendment to California’s “Seven-Year Statute” (aka California Labor Code Section 2855). This change allows record companies to sue artists for damages (including potential lost revenue) if they leave after seven years, but before delivering the required number of albums in their contract.

Although the committee considered the bill early in the afternoon, it took until the end of the 13-hour hearing – near 11pm – for enough committee members to vote to decide the fate of the bill.

“We welcome the committee’s thoughtful decision to reject AB983,” was a statement issued by the California Music Coalition, a group of more than 20 record companies from across California that opposed the bill, as did the Recording Industry Association of America. “The committee recognized that AB 983 would have radically destabilized recording contracts and the entire California music economy, taking money out of the pockets of working artists to fund even larger paychecks for wealthy managers and lawyers.”

While expressing their disappointment, the main proponents of the bill, including the Music Artists Coalition, the Black Music Action Coalition and the Songwriters of North America, promised to fight on. “It is heartbreaking that the artist community – so far – will continue to be denied equal protection. The FAIR Act was an opportunity for society to come together and the brands refused to participate, ”they said in a joint statement. “This is a fight, not the war.”

The author of the bill, Assemblyman Ash Kalra (D-San Jose), also expressed its commitment to continuing to fight for artists. “With opposition from the industry and a tight timeline to pass another committee, AB 983 unfortunately did not move forward today,” he said in a statement. “I remain committed to concluding contract terms that are too restrictive, outdated and unnecessarily punitive to recording artists and thank the sponsors for their support and partnership.”

The seven-year statute, which limits personal service contracts for nationals to seven years, was passed in 1944 following the verdict in actress Olivia de Havilland’s lawsuit against Warner Bros. Pictures.

This is the fourth time that the bill – in its various forms – has not been adopted or passed. Kalra, together with new co-sponsor, assembly member Eduardo GarciaD-Coachella, reintroduced the current iteration of AB 983 in May via a process known as Gut & Amend: the language of a bill that has already passed through the Assembly and is now in the California Senate has been removed, and the language of the new bill inserted.

Kalra took the step after an earlier version, then known as AB 2926, was pulled ahead of a hearing before the assembly’s art committee in February.

That bill was based on AB 1385, which was introduced by a former member of the Assembly Lorena GonzalezD-San Diego, in March 2021, but she withdrew the bill in December when she left office to become head of the California Labor Federation.

Gonzalez took up the case 20 years after a number of artists, including Don Henley and Courtney Love,, and leaders such as Irving Azoff led to a failed attempt to repeal in 2001.

At the request of lawmakers, the version of AB 983 heard by the Judiciary Committee on Tuesday had been changed to be more etiquette-friendly from version that had passed through the California Senate Committee on Labor, Public Employment and Retirement on June 22, but it still did not get the bill enough votes to pass.

The earlier version called for an action that wanted to leave their record company after seven years to repay any advances received from the record company for non-delivered albums, “provided the amount is credited to the music talent’s existing royalty account.”

If adopted, the new version would have raised the amount of the advance the artist paid back for any undelivered albums to 120%, and the provision crediting this amount to the artist’s royalty account would have been removed.

Although ultimately unsuccessful, during the 40-minute hearing, Kalra indicated that he wanted to find more ways to propel the bill forward and receptive to both the opposition and lawmakers. In addition to the deferred refund, he called for an outgoing action to reimburse the record company for 130% of all reimbursable expenses, such as recording costs that the record company has already spent on non-delivered albums. “I understand that the opposition is fierce, but my commitment to trying to find a way forward is still strong,” Kalra told the committee.

The economist testified in person on behalf of AB 983 Ted Tatos by the consulting firm Econ One, which co-authored an economic analysis published by proponents of the bill on June 16, and ARC Strategies consultant Dominic DiMarerepresenting the Music Artists Coalition, which read a statement from artist lawyer and co-founder of Songwriters of North America In LaPoltwho were not present.

“The current law, the seven-year statute or its exclusion, is unreasonable. It does not protect all citizens of California equally,” LaPolt wrote in its statement, read by DiMare. [carve-out] maintains the imbalance that exists between dominant record companies and the individual artists. ” Since the amendment was adopted in 1987, “not a single artist has successfully received the seven-year protection, and that is because compensation compensations are an extraordinary barrier to the use of the seven-year statute.”

While not present at the hearing, LaPolt took to Twitter shortly after the bill was heard to urge the chairman of the Judiciary Committee, Senator Thomas J. Umberg, who abstained: “@SenatorUmberg you should be ashamed. In the pockets of companies NOT the music artists of CA. boy, goodbye. “

She also took to music parties and tweeted “Record companies are lying pieces of shit. Stop joking with artists. You suck and they hate you all.”

The hearing, which included nearly 60 bills, lasted more than 12 hours, and as time went on, and both sides waited for committee members who had not attended the hearing to cast their votes, other proponents, including BMAC, also took Twitter to pitch individual senators. “Feel free to stand with the artists and support the Fair Act! Do not leave us,” BMAC tweeted to the senator Bob WieckowskiD-Fremont, who voted no.

Azoff tweeted to all committee members, “Please support The FAIR Act and the artists who make the music.”

To witness the opposition was Jeffrey HarlestonUniversal Music Group’s General Counsel and Chief Business Officer and Founder of Hopeless Records Louis Posen.

“No one on the recorded music side challenges the seven-year rule,” Harleston said. “We understand that this is the law of the State of California, has been throughout the time I have been practicing law in the State of California in the music industry, and we assume will be the law in the years to come. This is no exception. A dispensation means “that you exempt someone from being able to do something. In this case, what the proposers are asking for is an exemption for the artists, an exemption from their contractual obligations.” He added that while artists, UMG is trying to sign, are represented by “competent lawyer … We actually offered an amendment which for some reason was rejected, where we would even say that we would not pursue compensation against any signed artist who was not represented by a lawyer. ”

The bag, which started Hopeless almost 30 years ago, argued for indie labels that sign artists in “genres that big companies will not take a chance on. We are the companies that believe in long-term artist development and take the time to really to develop someone’s career, ”and notes that artists are signed to a number of albums, not a number of years.” What we need is a clarity on how many albums we have, so we know how to plan and invest. If this bill goes through, there is a lack of clarity on what that deal means … I do not know how a label can plan or invest if they do not know how many records they are getting. “

While Posen was against the bill, a number of independent labels, including Epitaph, Mad Decent and Ninja Tune, had gone on record and supported AB 983 or its previous iterations.

After the testimony, Wieckowski questioned how labels and artists in conflict resolve whether a product counts as an album in relation to the contractual obligation of the act, arguing that “we have a legal system” for handling disputes.

Kalra maintained that the problems that AB 983 was trying to solve were bigger than that and were about “self-determination” for an artist. “When seven years come, they should be able to leave … there should be adequate compensation [to labels] to allow them to do so, but to keep expected profits over their heads when the reality is that it is a very difficult thing to decide … What we are trying to do here is to get to a point that frees the artist, the only, only service workers in this entire state [have] an exception to the seven-year rule because the brands lobbied for it in 1987 … we put our thumb on the scales, we have to remove it. “

So far, that thumb will at least stay, but some senators have expressed interest in keeping the negotiations going. “Although I’m sensitive to industry concerns [we are] to interfere in contractual relations, we really do not, ”said the senator Scott Wiener, D-San Francisco, who voted yes. “I do not think it is appropriate for us to explore to change this, and although this issue is not unequivocal, it is not a slam-duck … I think, all in all, to move in this direction is the right way to go. “

Senator Henry Stern, D-Malibu, voted yes and also expressed interest in the continued involvement of the Senate: “The current state of the industry needs to be revised and I think it is an important conversation to spur. I understand it’s an unpleasant conversation, but I appreciate it [Kalra] forces us to struggle with this, and I do not think it is a snake pit that we should all stay out of. The music industry is truly our only hope for a creative economy in the state of California. ”

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