Sly StoneA court ruling has ended on a sour note for embattled musician Sly Stone, who has lost yet another fight to regain royalties that flow from his catalog of hit songs.  The Court of Appeals for the State of California handed down a ruling in favor of music giants Sony Music Entertainment, Warner/Chappell Music Inc. and Broadcast Music Inc., among others, deciding they did not have liability as a result of a lack of due diligence for royalty payments that allegedly were diverted from Stone.

Sylvester Stewart, professionally known as Sly Stone, enjoyed great success in the late ’60s and ’70s as the charismatic front man of the band, “Sly and The Family Stone.”  Known for songs such as Dance to the Music, Everyday People and Family Affair, the band ushered in a genre of music fused with funk, soul and psychedelic rock. In the ensuing decades, however, Stewart has found himself battling drugs and financial woes, reportedly reduced to near destitution and living a nomadic life on the streets of Los Angeles in a camper.

The appellate decision paints a painful picture of Stewart’s fall from a lavish life at a musical pinnacle, with his inattention and ignorance to his business and legal affairs extracting a huge toll.

Since the 1970s, as litigation has spelled out, Stewart has transferred most of his music rights to various individuals and entities to try to satisfy personal debts, a multimillion-dollar tax lien on his income by the IRS and to fuel a drug addiction. His former manager, Ken Roberts was one such beneficiary when Stewart irrevocably assigned to him his BMI-administered performance-right royalties.

This lawsuit arises out of an “Employment Agreement” and “Shareholders Agreement” that Stewart signed with “Even Street Productions Ltd.” It resulted in Even Street managing all of Stewart’s personal and professional financial affairs. Jerry Goldstein, Glenn Stone, and Stephen Topley, who ran the company, also advised Stewart that he shouldn’t have any assets in his name or receive royalties directly.  The group then took out $5 million in bank loans secured by Stewart’s future royalties; in 1996, they successfully negotiated with the IRS to end its liens against Stewart’s income, without telling him.

 

 

In 1996, “Majoken Inc” was formed by Goldstein, Stone, and Topley. They instructed BMI to start sending royalty checks directly to Majoken without the consent of Stewart or Roberts — though in 1976, Roberts had formed his own corporation, also named Majoken, that BMI sent Stewart’s royalty payments to.  From 1989 until 2009, Sony paid royalties under its 1967 and 1972 recording contracts to Even Street, under the 1989 assignment by Stewart to Even Street.  Warner administered and marketed Stewart’s compositions under its contract with Michael Jackson’s MiJac Music; Stewart had sold his publishing interest in most of his existing musical compositions to MiJac.

In 2008, after Goldstein had stopped giving Stewart advances, leaving him destitute, the pop star obtained a copy of his 1989 Employment Agreement that made him a mere employee. He soon provided the agreement to Sony, BMI and Warner and they all suspended royalty distributions.

Stewart and Roberts sued current management, Sony, Warner, BMI and three dozen others, claiming that for more than two decades, the Employment Agreement was used to “divert, convert and misappropriate” the artist’s royalties and he was kept in the dark for so long because he believed that his royalties were minimal due to the tax liens and levies over his income.

In its ruling, the court addressed only the liability of Sony, BMI and Warner and found that Stewart had no standing to sue any of the music companies.  His assignment of royalty payments to Roberts precluded any breach of contract claim against BMI; he, likewise, had no claims against Sony or Warner, because they simply had relied on contracts instructing them to direct royalty payments.  They only were notified in 2009 of possible wrong-doing, to which they responded by suspending royalty distributions.   The court acknowledged that Roberts has standing against BMI to bring claims for breach of contract.  BMI, unaware of the existence of two companies named Majoken until 2009, paid out $600,000 or so in royalties from Stewart’s music to Goldstein’s company.

A recent episode of the TV One show “Unsung” featured Stewart, now 68, living in his mobile home and continuing to record music using a laptop. That’s a far cry from the Beverly Hills mansion he once lived in and where he hosted legendary psychedelic parties jammed music icons like Stevie Wonder, Jimi Hendrix, Janis Joplin and Miles Davis.