COURTNEY LOVE COBAIN, et al., Plaintiffs, vs. DAVID GROHL. et al., Defendants.	) ) ) ) ) ) ) ) ) ) ) )	No. 01-2-13059-5 SEA MEMORANDUM RULING ON MOTION FOR INJUNCTIVE RELIEF

On her own behalf and on behalf of her daughter, plaintiff Courtney Love Cobain ("Courtney Love") has come to this Court to seek relief against David Grohl and Krist Novoselic, who are the two surviving members of her husband's group, Nirvana, against the business entity Nirvana, L.L.C. ("the LLC") and against the successor holder of The David Geffen Company's contract with Nirvana ("Geffen/Universal").

All parties agree that much is at stake here, including the possible publication of a previously unreleased and potentially very valuable recording by Kurt Cobain.

Plaintiffs' Complaint seeks many forms of relief, but the current motion addresses only the question of preliminary injunctive relief pending trial or further court order. Defendants have sought no affirmative relief from plaintiffs. Defendants ask only that this Court deny plaintiffs' Motion.

The Court has reviewed all briefs and declarations submitted in support, opposition and reply, along with the case law cited therein, and has taken extensive oral argument. For the reasons set forth below, the Court is issuing a limited injunction simultaneously with the filing of this Memorandum Ruling. Statements of fact set forth below shall be treated as Findings of Fact, and statements of law shall be treated as Conclusions of Law.

The present dispute has arisen from the impending contract deadline for delivery of 45 previously unreleased Nirvana master recordings for inclusion in a Boxed Set.

Defendants Grohl and Novoselic would like to go forward with Geffen/Universal in the preparation and ultimate release of a Boxed Set coordinated with the tenth anniversary of the release of Nirvana's first hit album "Nevermind." Plaintiff Courtney Love, who has succeeded to her husband's interest in the matter, has expressed concerns about the contents of the Boxed Set, particularly the possible inclusion of the Kurt Cobain recording "You Know You're Right." All parties believe that that recording, which has never before been released, has the potential to be a significant hit.

Two sets of contract documents define and determine the parties' rights at this stage of the dispute. While each set of contract documents ultimately may have an impact on the other, each is distinct and must be analyzed separately.

1. Nirvana's Internal Contract Documents

Paragraphs 6.4 and 6.4.10 of the LLC's organizing documents are central to the present dispute. They read, in pertinent part:

6.4 Limitations on Rights and Powers. Notwithstanding anything to the contrary contained herein, the following actions shall not be taken by the LLC or the Board without first obtaining the unanimous written consent of the Members:
   * * *

6.4.10 Authorize the release by Geffen . . . of a commercial album embodying the performances of Nirvana not previously released or otherwise exploited prior to the date hereof, including, without limitation, a so-called Boxed Set or "Best Of" compilation.

(Decl. of C. Love in Support of Motion, Ex. A)

2. Nirvana's Recording Contract with Geffen/Universal

On April 30, 1991, prior to Kurt Cobain's death, Nirvana entered into a recording contract with The David Geffen Company. (Decl. of C. Love, supra, Ex. B.) Through a series of acquisitions, The Geffen Company is now owned by a Universal subsidiary. At various dates after 1991, the contract has been supplemented and amended by the parties and/or their successors. The amendment pertinent to the current motion was made by letter bearing the date of July 2, 1996. (Decl. of C. Love, supra, Ex. F.) Paragraph 1(b) of that 1996 letter amendment addresses the Boxed Set. It reads, in pertinent part:

You [the LLC] agree to Deliver to Geffen a so-called "boxed set" Multiple Record LP comprised of no less than forty-five (45) Masters embodying previously unreleased recordings of musical performances by Artist, so-called "B-sides," and other Masters (the "Boxed Set"). The Masters to be embodied on the Boxed Set shall be determined by you in meaningful, good faith consultation with Geffen . . . You shall Deliver the Boxed Set to Geffen no later than June 30, 2001 . . .

(Id., at p.2)

3. The Parties' Description of the Context of the Present Motion

It may well be that Courtney Love's actions are at their core utterly crass and selfish. Or it may be that her self-described attempts to "revolutionize the record business" are in the highest tradition of service to others which will in the end provide greater benefits for all recording artists, including the LLC, Grohl and Novoselic. It may also be that Geffen/Universal's actions are at their core utterly crass and selfish, or that they too are serving some higher ideal. On the record presently before this Court, none of this matters.

Contract rights are not normally limited to those who are pure of heart. Only on rare occasions is a court called upon to examine motive, and the brief record currently presented to this Court does not provide an adequate basis for this Court to make any relevant final findings of fact or conclusions of law as to the motive(s) of any of the acting parties. The Court's decision on this motion for preliminary injunctive relief rests on fundamental contract law, and not on the histrionics of either side.

4. Should an Injunction Issue?

There are three questions to answer, in order to determine if an injunction should issue. First, would damages constitute a sufficient remedy for any wrongful activity a court might ultimately find in this litigation? Second, which party or parties have the present right to control actions of the LLC as to the Boxed Set? Third, what are the probable court rulings as to the relative rights and duties of the LLC and Geffen/Universal under the 1991 contract as amended by letter dated July 2, 1996?

The answers to the first two questions are largely dispositive of the current motion. While the Court also addresses the third question, it does so only in the context of anticipating probable rulings by this and by other courts, as well as deciding whether on this record the Court can determine the probable existence of fiduciary and related rights and duties of and among Grohl, Novoselic and Love internal to the LLC that might affect any claim for equitable relief. Such discussion is not to be taken as a final determination of either the LLC's or Geffen/Universal's compliance with the 1991/1996 contract documents and their ultimate rights and duties with respect to each other.

(a) Does the Award of Damages Present an Adequate Remedy?

The subject matter of this dispute is of great importance to all parties to this action.

Within the LLC, the members agreed in Paragraph 15.17 that money damages may be an inadequate remedy for breach of this agreement and in such an event it is agreed that a court of competent jurisdiction may direct that this agreement be specifically enforced or that other equitable relief be ordered.

(Ex. A, at Para. 15.17.)

Likewise, Nirvana's 1991 recording contract with Geffen specifically recited:

You [the LLC] acknowledge, recognize and agree that Artist's services hereunder are of a special, unique, unusual, extraordinary and intellectual character which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated for by damages in an action at law.

(Ex. B, at Para. 13.03.) By the foregoing contract documents, the parties themselves have agreed that damages are likely to be insufficient. This Court as well has so concluded on the present record. And, as a matter of logic, if these artistic services have the value described in the 1991 contract language drafted by Geffen and cited above, that proposition would be equally true for both contracting parties and could support vigorous bargaining on each side to protect their interests regardless of the fact that Geffen's contract thereafter addressed only his own rights to injunctive relief.

(b) Who Has the Right to Control the Actions of the LLC?

The words of paragraphs 6.4 and 6.4.10 of the LLC's organizing document, cited on page 3 of this Court's ruling, above, are clear. All three, Grohl, Novoselic and Love, must be in agreement before any previously unreleased performances are released, and must express this agreement in writing. No limits are imposed by the agreement on the discretion of any one of the three to withhold his or her consent. Each of the three therefore has veto power on any proposed release.

The rights and the duties of the members of the LLC vis-à-vis each other, as an entity, are distinct from their rights and duties vis-à-vis third parties such as Geffen/Universal.

Grohl and Novoselic appear to support the release of "You Know You're Right." Courtney Love does not seem to support it at the present time. The parties have not presented this Court with a sufficient record to conclude that only one position on the release of "You Know You're Right" is reasonable and that any other position must be dismissed as a matter of law. At this stage, the Court simply cannot conclude that there is no room for reasonable minds to disagree about whether that performance should be released now, or held for a later or different release, or released now only if certain marketing and promotional steps are put in place. As long as there is room for reasonable business judgments to be made in either direction, it would be the height of judicial arrogance for this Court to issue a peremptory ruling that that recording either must, or must not be, released to Geffen/Universal.

The stakes are high. Emotions are high. Vigorous bargaining tactics are a natural and necessary part of high-stakes business negotiations. While defendants wish this Court to conclude immediately that Love's currently stated desire to hold back immediate issuance of "You Know You're Right" is somehow wrongful, the Court cannot do so for the reasons just expressed above.

In addition, this Court cannot turn a blind eye to business reality. Corporations and other business entities regularly determine which contracts they will perform because they are beneficial or because they are too expensive to contest, and those which they will seek to modify or will simply breach because they have determined that breaching or modifying the contract would in the long run be advantageous to the shareholders of the corporation. When a contract is breached, that corporation may then be held accountable in damages or other relief to the third party whose contract has been breached, but it is not necessarily the case that the decision to breach a third-party contract is harmful or wrongful conduct vis-à-vis shareholders or members of a given corporation or business entity.

Courtney Love would have this Court - and, presumably, all courts - conclude that recording contracts such as the LLC's contract with Geffen/Universal are contracts of adhesion and are terribly abusive and one-sided and harmful to the interests of artists. This Court has no basis to make such a finding or conclusion today, and it may never have. Nonetheless, the Court also cannot at this time grant Summary Judgment against such a claim or otherwise dismiss it out-of-hand, or conclude that because she might well be acting in that belief she has thereby automatically forfeited or waived her right to exercise her veto on releases under Para. 6.4.10.

As a matter of the internal structure of the LLC, and on the present record, Courtney Love has the power to do what she is doing: withhold her consent to the release of a particular unreleased recording, in this case, the Kurt Cobain recording "You Know You're Right." This is a clear legal right. She has a well-grounded fear of invasion of that right by Grohl and Novoselic. Release without her consent would result in actual and substantial injury to her interests. Injunctive relief against Grohl and Novoselic is appropriate.

(c) What are the Probable Rulings as to the Rights and Duties of the LLC and Geffen/Universal to Each Other?

Defendant Geffen/Universal urge this Court to deny the requested injunction, pointing to the June 30 deadline as absolutely critical. Defendants are correct to note the deadline, but the emphasis on the deadline only obscures a more central point: the recording contract's language does not appear to give Geffen/Universal the power unilaterally to designate a particular unreleased recording for inclusion in the Boxed Set.

In oral argument, counsel for Geffen/Universal referred the Court to Paragraph 9.01 of the 1991 contract, in which the parties recite that Geffen is the owner of all master recordings, released or not. Even if that were a fair reading of that language, it is undisputed that the more recent 1996 letter agreement amended the earlier 1991 document. Regardless of ownership, Paragraph 1(b) of the letter amendment specifically provides that the selection of masters to be embodied on this Boxed Set "shall be determined by you [the members of the LLC] in meaningful, good faith consultation with Geffen." Such a clause would have no meaning if Geffen/Universal had the power to make that call unilaterally. The letter amendment does not say, for example, that the choice would be made "by Geffen upon and after consultation with you" or anything similar, in which event Geffen might well have retained the controlling hand. A court is likely to rule that, regardless of ownership, the selection of masters for this particular Boxed Set is not subject to the unilateral control of Geffen/Universal, and that the LLC controls any choice it makes "in meaningful, good faith consultation with Geffen." Each of the three, Grohl, Novoselic and Love, retains a veto over any release. This Court presumes that both the LLC and Geffen/Universal will engage in meaningful, good faith consultation with each other, and expects that as in any high-stakes business venture some good faith proposals on one side may call up a heated response on the other. Good faith negotiations often include hard-fought proposals and concessions.

There is no need for this Court at this stage to forbid either side from demanding the inclusion or exclusion of any particular unreleased recording, or to preclude any topic of discussion, whether it is specific to promotion, marketing and compensation arrangements for of this particular Boxed Set or is in contemplation of possible broader-scale changes in the record industry. No broad-scale changes in any industry would generally be addressed without a particular event or release in mind, and it is not proper for this court at this stage and on this record to prevent business persons from exercising their business judgment as to what topics merit discussion in a high-stakes setting.

There is no showing yet of wrongful actions by either plaintiffs or defendants under Paragraph 1(b) of the letter amendment, and no showing that Courtney Love's bargaining position breaches any of the LLC's contractual obligations to Geffen/Universal.

5. Destruction of Recordings

Feeling is high. Where parties are as incensed at each other as these appear to be, actions can be taken in the heat of the moment which are motivated by spite but remain self-destructive. In order to be sure that the subject matter of this case is preserved for final court ruling or agreed resolution by the parties, this Court will issue an Order that no party, including plaintiffs, is to destroy any existing recordings of Nirvana and/or Cobain, released or unreleased. This will assure preservation of the status quo until passions have returned to normal.

On the present record, Courtney Love has the clear contractual power to prevent release of previously unreleased recordings of Kurt Cobain without her consent. An injunction will issue to prevent the irreparable injury that would flow if Grohl or Novoselic deliver or otherwise release previously unreleased masters to Geffen/Universal without her consent, including specifically any recording by Kurt Cobain of "You Know You're Right."

There is no need to enter an injunction against Geffen/Universal at this time with regard to the Boxed Set. There is no showing of wrongful acts in any negotiations over the Boxed Set, and no showing that they have possession of the disputed Cobain recording as to which an injunction might properly issue to prevent premature unauthorized release.

In the absence of evidence establishing the contrary, this Court presumes that both sides will negotiate in good faith about the inclusion of masters in the Boxed Set.

IT IS SO ORDERED this 11th day of June, 2001.

	Judge Robert H. Alsdorf KING COUNTY SUPERIOR COURT