Risk Update

Disqualification Debates — Walgreens DQ Arbitration Fight, H.E.R. Record Label Contract Conflicts Battle

Posted Dan Bressler

“H.E.R. Sues Her Record Label and Asks Out of Contract” —

  • “Grammy-winning singer H.E.R. is suing her record label MBK Entertainment, claiming that her contract breaks labor code statutes and must be voided.”
  • “In her suit filed in Los Angeles last Thursday, H.E.R., whose real name is Gabriella Wilson, claims that MBK Entertainment, the record label of her manager Jeff Robinson, violated California’s business and professions code with her contract, which she signed at age 14.”
  • “The suit, first reported by the Blast, alleges that Wilson didn’t have proper independent legal representation following her signing with MBK in 2011. Robinson, founder of the company and former manager to Alicia Keys, became her manager soon after she signed, and he allegedly fired her old law firm before bringing in his own lawyers to negotiate subsequent deals such as her publishing deal.”
  • “Such an act could present a potential conflict of interest because Robinson would be representing both the artist and the label, but as the suit states, Wilson never signed a conflict waiver. The suit also alleges the lawyers took 5 percent from the deals they negotiated but that Wilson never agreed to that fee.”
  • “Wilson’s lawsuit also claims the contract violates the California labor code’s seven-year statute, and that the deal should be voidable and ceased as of May 18, 2019. ‘Wilson’s seven years have run,’ the suit said. ‘MBK’s attempts to thwart this important and fundamental California public policy should not be condoned.'”
  • “That seven-year statute is itself a hot-button item in the music industry. While most workers in California are protected from personal service agreements from lasting more than seven years, there’s an exception specifically for musicians, with record labels entitled to sue for damages if an artist walks from their deal after seven years and still owes the label undelivered albums. The previously introduced FAIR Act seeks to end that exclusion and faces a vote from California’s senate this week.”

“Walgreens appeals to keep counsel DQ fight out of arbitration” —

  • “A lawyer for Walgreen Co urged a Washington, D.C., appeals court to revive a key part of an alleged professional misconduct claim that the retail pharmacy giant brought against one of its former law firms now representing its adversary in arbitration.”
  • “Walgreens last year sued Crowell & Moring in District of Columbia Superior Court to immediately stop the large law firm from representing insurer Humana Health Plan Inc in an arbitration with Walgreens over drug pricing, contending Crowell, as its former firm, has violated its ethical duty.”
  • “The main issue in Thursday’s appeal is whether an arbitration agreement between Walgreens and Humana applies to Walgreens’ ethics dispute with Crowell, which was not a party to the agreement.”
  • “The panel judges questioned whether a ruling might open a door to third parties being brought into an arbitration and they also closely examined the broad language of the arbitration agreement itself.”
  • “‘There’s a sentence that just says, ‘If there’s a dispute about the scope of this agreement, you and Humana have agreed an arbitrator will decide it,’ Judge Roy McLeese told a lawyer for Walgreens. ‘Do you think that the disputes we’re talking about today are not disputes about the scope of this agreement?'”
  • “Walgreens’ counsel Frederick Robinson of Reed Smith told McLeese and Judges Loren AliKhan and Corinne Beckwith that Walgreens ‘never agreed to arbitrate a dispute about the ethics of our former counsel in any forum other than a judicial forum.'”