An attempt to revive a collective action dismissed by the Competition Appeal Tribunal for being 'riven with potential conflicts' has been thrown out by the Court of Appeal. In Rowntree v Performing Right Society, Lord Justice Miles found that the Competition Appeal Tribunal did not err in law last year when it both struck out and refused to certify a claim brought by music writers over the formula used to distribute royalties.
The opt-out proceedings were brought by David Rowntree, a solicitor and drummer with Britpop band Blur, with investment from funder Litigation Capital Management. The claim alleged that the Performing Right Society unfairly favoured music publishers over writers in the way it distributed performance royalties that cannot be matched to a particular rights holder, so-called 'black box' royalties.
In August last year the CAT found that the collective action did not have a reasonable prospect of success because the proposed class was drawn more widely than those owed 'black box' royalties. Meanwhile, even in the event of success, the main beneficiaries might be the legal advisers and funder. As the non-profit PRS would have to pay any tribunal award from royalties 'the class was, in a manner of speaking, suing itself', the CAT found.
On appeal, counsel for Rowntree said that the CAT had erred in concluding that the class was too broadly drawn and by ruling that the distribution method was not necessarily unfair or abusive. The PRS filed a respondents' notice adding new reasons for upholding the CAT's judgment, including that none of the claimant's appeared to have tried to resolve the dispute through the PRS's own governance procedures.
Ruling for the PRS, Lord Justice Miles, with whom Lord Justice Nugee and Lord Justice Zacaroli agreed, found the claimants' case to be based on a 'manifest oversimplification' without any counterfactual showing how the royalties in question hould have been distributed. There was no evidence that the PRS' distribution method imposed unfair trading conditions on its members.
Commenting on the ruling, a PRS spokesperson said: 'This class action was fundamentally flawed, and was a complete misrepresentation of our policies from the outset. It would have resulted in PRS members suing the society they collectively own, despite there being soaring costs attached and no logical basis for doing so.'
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