The New York City Department of Social Services (NYCDSS) has called out Jay-Z in a federal court filing, accusing him of making “false” claims that have “poisoned” the upcoming auction of Damon Dash’s one-third share of Roc-A-Fella Records, which Dash planned to pay his substantial debts, including unpaid child support to two women.
In 1994, Roc-A-Fella Records was founded by Jay-Z, Damon Dash, and Kareem “Biggs” Burke. With an $823,000 judgment against him in federal court and $ 145,096 in unpaid child support, and an unpaid New York state tax bill of $8.7 million, Dash recently announced that he would auction off his one-third share in Roc-A-Fella. Although the auction is being held as part of the federal court proceeding, NYCDSS has priority to recover the unpaid child support amounts. Roc-A-Fella’s primary asset is Jay-Z’s album “Reasonable Doubt,” other entities now own the rest of the music initially released by Roc-A-Fella and not part of this dispute.
Jay-Z and Burke previously sought to derail the auction by intervening in the federal lawsuit and attempting to block the auction by arguing that changes to Roc-A-Fella Inc.’s bylaws required their approval of any sale. The court rejected their arguments, ruling that the changes to the bylaws were unenforceable because they had been made without Dash’s input and suggesting that Jay-Z and Burke participate in the auction and place their own bid.
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Thereafter, Jay-Z made public statements claiming that he personally has a “termination right” under copyright law to take back ownership of the copyright in the album in seven years, so any purchaser’s rights would be strictly limited to that period.
On September 20, counsel for NYCDSS filed a motion in the federal court proceeding, writing that:
Jay-Z’s statements to the press have poisoned the environment for the auction. He has claimed that he has a termination right under the Copyright Act and that the rights to Reasonable Doubt will revert to him in six years. In fact, he has no such termination right and [Roc-A-Fella] is entitled to the renewal term, which is now 67 years, meaning it will own the copyright rights until the year 2098. In other words, the highest possible auction price could be more than ten times higher than is likely now, given Jay-Z’s and [Roc-A-Fella’s] actions.
The motion further characterized Jay-Z’s statements as “false and extremely damaging to the City’s interests in ensuring that the auction will generate sufficient funds to satisfy all existing child support arrearages and secure future child support payments.” NYCDSS attached to its motion a copy of Jay-Z’s 1995 recording agreement, pointing to language that it claims to expressly contradict his claim of a “termination right” under copyright law.
NYCDSS’s motion seeks a court order staying the auction until the Court issues a ruling on whether Jay-Z possesses any termination right and ordering Roc-A-Fella to provide royalty records for the “Reasonable Doubt” album and to produce a witness for a deposition. The City of New York appears to have had enough of Jay-Z’s campaign to devalue Dash’s share of Roc-A-Fella before the auction, at the expense of all those to whom Dash owes money, including the mothers of his children, the plaintiff in the federal lawsuit, and the beneficiaries of Dash’s many millions owed in tax revenues.
The full court filing can be read here.
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