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ONErpm has filed a lawsuit against CmdShft and its two co-founders, Sonny Findlay and CEO Jarrod Cooper.
Filed at the Chancery Court for Davison County, Tennessee on April 16th, digital distributor ONErpm has accused CmdShft, a label boutique services company, of unlawful conduct. The latter had allegedly engaged in “procuring the breach of and tortiously interfering” in the digital distributor’s contracts with its clients.
Additionally, ONErpm has accused two former representatives – CmdShft’s founders Sonny Findley and Jarrod Cooper – of making “defamatory statements” about the digital distributor. Both have also breached the fiduciary duty of loyalty owed to the digital distributor.
Cooper, claims the distributor, founded CmdShft while still employed at ONErpm, receiving a salary and benefits. Alongside Findley, he had negotiated many of the distributor’s contracts with contracts.
The lawsuit stems from a single incident which first started on September 8th, 2017.
ONErpm had entered into an exclusive master rights administration agreement with Dirt Rock Entertainment. Under the deal, the distributor would collect money from Dirt Rock’s works and would pay the company a percentage of net receipts.
The agreement would automatically renew every two years.
Repeating the main allegations, the distributor claims that once Findley and Cooper established CmdShft, they both allegedly procured a breach of agreement and tortiously interfered with ONErpm’s contract with Dirt Rock. Additionally, Findley “defamed” the distributor through the publication of “libelous falsities.” These actions, says the digital distributor, have damaged its business.
Findley, who had initially negotiated the deal, resigned on August 1st, 2018. He soon served as a label manager for Dirt Rock.e
On social media, he vented about the distributor’s poor treatment of artists. This tirade, says ONErpm, proves the defamation claim.
Cooper, meanwhile, had left “for personal reasons” on July 1st, 2018.
Though ONErpm paid him for the leave, including a 401(K), he never returned to the company.
During his paid leave, the distributor claims Cooper founded CmdShft alongside Findley. Both allegedly “began distributing and exploiting” Dirt Rock’s content, breaking the latter’s deal with ONErpm. Thus, they’ve profited from its exclusive agreement.
The distributor has filed four claims against CmdShft, Findley, and Cooper. These include tortious interference with performance of contract, procurement of breach of contract, defamation/libel, and breach of fiduciary duty of loyalty.
ONErpm has demanded compensatory, consequential, and punitive damages.
Not so fast, says Cooper. Pay up what you promised me first.
According to CmdShft, however, the digital distributor has only filed a lawsuit since the label services firm is now a competing business.
The label services firm told Digital Music News via e-mail,
“They’re using the pending litigation to scare clients away from CmdShft.”
In addition, the digital distributor knowingly holds artist clients “hostage in oppressive deals.” ONErpm apparently locks up artists for three years, threatening litigation with those who attempt to leave.
In a separate lawsuit filed yesterday over $10 million promised in equity, Cooper claims the digital distributor has merely filed a fraudulent lawsuit.
“Contrary to ONErpm’s allegations, Mr. Cooper, and Sonny Findley left [the company] because ONErpm entered into artist contracts that were oppressive and one-sided.”
The lawsuit states that the distributor willfully “lures” artists to ‘exclusive’ digital distribution deals. The company also outright fails to provide any meaningful compensation for the exclusivity it demands its artists, according to the complaint.
Cooper’s lawsuit focuses on Emmanuel Zunz, ONErpm’s CEO and co-founder. Zunz apparently vowed that ONErpm would “convey” a 10% equity interest in the company to Cooper. Zunz also allegedly pushed for Cooper and Findley to leave and start their own company. To date, ONErpm has yet to deliver the equity to Cooper, who had devoted “ten years of professional life” to the company.
In addition, ONErpm’s in-house counsel is accused of sending lawsuit threats to artists who consider choosing CmdShft instead.
“[We] understand that ONErpm has pointed to the existence of the lawsuit [against us] when competing for artist clients and also used the threat of litigation to compel artists to allow [the digital distributor] to distribute the artists’ digital clients.”
Denying all of the distributor’s claims, Cooper has now requested a jury of twelve to try the matter. In his claim, he accuses ONErpm of breach of contract and fraudulent inducement.
Concluding the correspondence with DMN, CmdShft lamented,
“It’s unfortunate that ONErpm is making these desperate attempts to disrupt our company. CmdShft believes in fair treatment of artists, fair deals, and fair competition in our industry.”
We’re awaiting a response from ONErpm.