Opinion ID: 296587
Heading Depth: 1
Heading Rank: 2

Heading: Distribution of the Fund

Text: 17 The district court has approved ASCAP's action in deciding to distribute the controverted fund as an addition to the regular distribution for the fourth quarter of 1970. Under the generally applicable rule as to distribution, the distribution to writers for the fourth quarter of 1970 would be based on performance during the last three quarters of 1969 and the first quarter of 1970; the distribution to publishers would be based on the last quarter of 1969 and the first three quarters of 1970 (adjustable in April 1971 when complete data for the four quarters are available). Appellants urge that distribution of the special fund ought to be made to those for whose performance the fund was paid, i.e., it should be distributed on the basis of performance during the years 1962-1969. 18 It seems to us that the application of usual equitable principles would lead to the result sought by appellants. 19 Appellants cite as an example of the inequity of the ASCAP distribution determination the case of a publishing company which was not organized until 1970 but which, under that determination, would receive a relatively large payment, although, of course, performance of its works could not have contributed at all to the creation of the fund. The record before us does not indicate how many such examples there may be. It seems fair to assume that there would be many instances in which inequities of greater or less degree would result, since it may be taken as common experience that there would be great differences in the production and the popular success of musical compositions over a period of nine years. 20 ASCAP does not seek to defend its method of distribution on the ground of equity. Indeed on September 23, 1970, the Executive Vice-President of ASCAP said: 21 In 1970 the Society has received certain unusually large sums from CBS and NBC [sic]. These payments relate to prior years and were made, for the most part, for the television networks of CBS and ABC. If the payments were for current license fees they would be distributed in the normal way. The fact they [sic] they are payments related to performances in prior years led your Board to decide that fairness required a special distribution. 22 Nor does the district court claim that its ruling is based on equitable principles. 23 The objection to a distribution which would reflect the incidence of performance of various musical compositions during the period for which the fund represents payment is twofold: first, it is said that the distribution directed by ASCAP and approved by the district court is required by the consent decree; second, ASCAP argues that a distribution based on performance during the retroactive period would be impossible or at least quite impractical from the point of view of expense and otherwise. 24 (1) We do not find in the consent decree any provision which would require that distribution be made by the method adopted by ASCAP. We are cited to certain language in a 1960 order which implemented in some respects the Amended Final Judgment of 1950. But as we read that language it provides merely for distributions based upon applicable survey quarter years, i.e., apparently, the quarters for which results of surveillance of performance are available and appropriate. The Amended Final Judgment of 1950 which is the basic charter for the entire operation provides: 25 Defendant ASCAP is hereby ordered and directed to distribute to its members the monies received by licensing rights of public performance on a basis which gives primary consideration to the performance of the compositions of the members as indicated by objective surveys of performances (excluding those licensed by the member directly) periodically made by or for ASCAP. 26 It seems clear to us that the decree contemplated a method of distribution based fundamentally on the number and character of the performances of the members' musical compositions. The supplemental order of 1960 was not intended to accomplish any change in this fundamental principle. There is no provision of the decree specifically applicable to a large retroactive payment of the type involved here and the possibility of such a payment may not have occurred to the parties drafting the decree. 1 The absence of such a specific provision cannot properly be interpreted to prohibit a distribution to those whose performances gave rise to the fund, a method of distribution which is supported by the general provision of the 1950 judgment and by the applicable principles of equity. 27 (2) Appellees argue that to achieve the kind of equitable distribution which would allocate the fund to those whose efforts served to create it would be impossible or, at least, highly impractical. Their argument, however, gives us little information as to the nature of the difficulties which they foresee. The only concrete example of such a difficulty that appellees advance is said to arise from the fact that while the total sum paid by CBS was allocated to the individual years covered by the payment, ABC's payment was not so allocated. Without deciding what formula should be adopted to resolve this problem, we suggest that there are several possible solutions, such as, for example, allocation of the ABC payment in the same proportions as the CBS payment was allocated. 28 Once an allocation as to years is completed, it would seem a rather simple matter to direct a distribution which reflected the presently available performance surveys for those years or which mirrored the percentage of the fund actually distributed to each member in each particular year. Again, this is merely a suggestion intended to illustrate possible bases of distribution which are both practical and surely more equitable than the one which ASCAP has adopted. 29 Appellants do not make any specific proposals as to the exact details of the distribution for which they argue. It is their position that the district court should hold a hearing at which proposals for distribution in accordance with general principles of payment to those whose performances gave rise to the funds could be made and given deliberate consideration. The United States also supports this procedure. 30 We are far from convinced that no practical plan of equitable distribution can be devised. It is not our function to formulate the details of such a plan. We believe, however, that an opportunity should be offered to the appellants and other interested persons to propose methods of distribution, and that the district court should make every attempt on the basis of such proposals, and of its own expertise, and with the assistance of the United States, to work out a plan of distribution which would more nearly approximate the demands of equity than the plan adopted by ASCAP.