Page "Elektra Records" Paragraph 12

In September 1994 another damaging controversy erupted when top heavy metal band Metallica filed suit against Elektra to terminate their contract and gain ownership of their master recordings.

The group based its claim on a section of the California Labor Code that allows employees to be released from a personal services contract after seven years.

By this time Metallica had been with the label for more than a decade and had racked up sales of over 40 million records, but they were still operating under the terms of their original 1984 contract, which provided a relatively low 14 % royalty rate.

The group also claimed that they were taking the action because Robert Morgado had refused to honor a new deal they had worked out with Bob Krasnow shortly before he quit the label.

Elektra responded by counter-suing the group, but in December New York magazine reported rumours that then Warner Music US chairman Doug Morris had offered the group a lucrative new deal in exchange for dropping the suit which was reported to be even more generous than the earlier Krasnow deal.

In January the group and Elektra jointly announced that they had settled the suit, and although a non-disclosure agreement kept the terms secret, media sources claimed that " a significant increase in royalty payments to the band as well as a renegotiation of the group's recording contract were key factors in Metallica and Elektra coming to terms.