September 2005 Volume 27 Number
Nine Inch Nails lead singer Trent Reznorís
claim that his former management contract is unconscionable was dismissed
because the contract terms were not unusual for the music industry, but the
court ruled that a jury must decide whether the manager breached a fiduciary
duty by committing fraud and conversion
by Mustafa Abdul-Rahman
Nine Inch Nails lead singer Trent Reznor is in a legal cat fight with his
former manager John A. Malm Jr.
Reznor started it by firing his management company J. Artist Management,
which is wholly owned by Malm, claiming that Malm had ďrun Reznorís finances
into the ground.Ē Malm responded by filing a breach of contract claim for $1.5
million in unpaid commissions from the Nine Inch Nailsí 1994-1995 tour.
Next, Reznor filed a separate lawsuit that
alleged Malm breached his fiduciary duty by fraudulently inducing Reznor into
business agreements which Reznor claims are unconscionable. Reznor took issue
with the term of the management contract that provided for Malmís 20% commission
to be taken out of gross revenue. Reznor also alleged that Malm gained full
ownership of NIN trademarks and the NIN merchandising company through fraud.
Reznor claimed that Malm transferred Reznorís money to jointly held companies
without his authorization.
Both sides filed summary judgment motions. Federal District Court Judge
Jed S. Rakoff dismissed Malmís breach of contract claim for unpaid commissions
from the NIN 1994-1995 tour because the applicable period of limitations had
breach of fiduciary duty, fraud and conversion claims survived summary judgment
because a reasonable jury could find in favor of Reznor on those issues.
However, Judge Rakoff did dismiss Reznorís unconscionability claim because
Reznor did not lack bargaining power when entering the agreement and the
contested terms were not unusual for the music industry.
Trent Reznor was represented by
Daniel A. Platt of Katten Muchin Zavis & Rosenman in New York. John A. Malm,
Jr. and J. Artist Management, Inc., were represented by Thomas More Lopez of
Esanu Katsky Korins & Siger in New York and by Debra Jean Horn of Meyers
Roman Friedberg & Lewis in Cleveland.
Reznor v. J. Artist Mgmt., 365 F.Supp.2d 565, 2005 U.S.Dist.LEXIS 6805 (S.D.N.Y.