# Recording Artists at the Termination Gate: Waite v. UMG Recordings

> A Southern District of New York court let recording artists pursue § 203 termination of their master recordings but refused to certify a class, holding the work-for-hire defense too individualized to resolve collectively.

Topic: Copyright  |  Author: Lidiia Levitska  |  Source: Intellectual Property Law (outsideipcounsel.com)
Canonical: https://outsideipcounsel.com/blog/waite-v-umg-recordings-sound-recording-termination/


In *Waite v. UMG Recordings, Inc.*, No. 1:19-cv-01091 (S.D.N.Y.), a group of recording artists led by John Waite and Joe Ely sued Universal Music Group to enforce notices of termination served under § 203 of the Copyright Act, seeking to recapture the copyrights in their master recordings decades after assigning them to UMG's predecessors. In an opinion granting in part and denying in part UMG's motion to dismiss (450 F. Supp. 3d 430 (S.D.N.Y. Mar. 31, 2020)), the court allowed the core termination claims to proceed; in a later ruling (Jan. 27, 2023), it denied class certification, holding that the work-for-hire defense to termination is too individualized to be litigated on a classwide basis. Together the two rulings map both the promise and the practical limits of the termination right for the recording industry. Judge Lewis A. Kaplan presided. The parties settled after the certification denial: the case was dismissed with prejudice on Dec. 14, 2023, and closed on a stipulation of voluntary dismissal in March 2024, so no appellate court ever reviewed either ruling.

## At a glance

- **Case:** *Waite v. UMG Recordings, Inc.*, No. 1:19-cv-01091 (S.D.N.Y.), filed Feb. 5, 2019; settled and dismissed with prejudice Dec. 14, 2023.
- **Court:** U.S. District Court for the Southern District of New York (Kaplan, J.).
- **Issues:** (1) Are sound recordings made by featured artists "works made for hire" exempt from termination? (2) Are grants executed by an artist's loan-out company terminable? (3) May termination claims proceed as a class action?
- **Key rulings:** The court declined to resolve at the pleading stage whether the recordings were works made for hire; held that grants executed by third-party loan-out companies are not terminable by the artist; and later denied class certification because the work-for-hire inquiry requires artist-by-artist analysis.
- **Why it matters:** It was the leading modern test of whether the wave of artist terminations now coming due can succeed, and whether artists can pursue them efficiently as a group. The settlement left both rulings on the books as district-court authority only.

## The termination right meets the master recording

Section 203 lets an author terminate a post-1977 grant during a five-year window opening 35 years after the grant, on advance written notice. For songwriters, the right is now routine. For *recording* artists, it is newer and far more contested, because the master recording sits at the heart of the major labels' catalogs and because the labels have long maintained that masters are works made for hire, a status that would extinguish the termination right entirely.

That defense is the whole ballgame. Under § 201(b), if a recording is a work made for hire, the label is deemed the author and owner from inception; the artist never held a copyright to grant, so there is nothing to terminate. UMG's position, in essence, was that the masters were the label's works made for hire, placing them outside § 203 no matter what notices the artists served.

## Why the recordings were not works for hire at the pleading stage

The Copyright Act's work-for-hire definition has two prongs. The first covers works prepared by an *employee* within the scope of employment. The second covers certain *specially ordered or commissioned* works, but only those falling within nine enumerated statutory categories *and* memorialized in a signed agreement. Sound recordings are conspicuously absent from the nine categories, a point that has bedeviled the labels for years and that prompted a short-lived 1999 amendment (quickly repealed in 2000) attempting to add them.

The court refused to dismiss on work-for-hire grounds, but for a narrower reason than the headline suggests. Although the artists' agreements contained "works made for hire" language, the court observed that at that stage neither side argued the recordings were specially commissioned, and neither side contended there was an employer-employee relationship between the artists and the recording companies. UMG invoked the for-hire language only to argue when the statute of limitations began to run. The court therefore said it need not resolve, on that motion, whether the agreements conferred "for hire" status on the works, and let the termination claims survive with the question left for a developed record.

The court also rejected two of UMG's gatekeeping arguments. It held that the artists' claims were not time-barred under the three-year limitations period governing ownership disputes, reasoning that the dispute was about enforcement of termination rights rather than a stale ownership repudiation. But it handed UMG one significant win: grants executed not by the artist personally but by the artist's own *loan-out company* (a corporate entity used for tax and contracting purposes) are not terminable under § 203, because the statute reaches grants "executed by the author," and a corporation is not the author.

## The class-certification denial and the "instance and expense" problem

The artists sought to litigate on behalf of a large class of similarly situated performers. The court denied certification on Jan. 27, 2023, and the reasoning is the case's most consequential teaching. UMG pressed both work-for-hire theories, and each is fact-bound. The employee prong runs through the thirteen-factor test of *Community for Creative Non-Violence v. Reid*, 490 U.S. 730 (1989), which the court said would require evaluating evidence artist by artist. The commissioned prong runs through the judge-made "instance and expense" test, which the Second Circuit treated as carrying essentially the same meaning as "specially ordered or commissioned" in *Playboy Enterprises, Inc. v. Dumas*, 53 F.3d 549, 562 (2d Cir. 1995). That test asks whether the hiring party induced the work and bore the financial risk: it looks to the label's impetus, participation, and power to supervise, the resources it invested, and the form of payment, with a sum certain pointing toward for-hire status and royalties pointing away.

Those are inherently individualized inquiries. One artist may have recorded at the label's studios, on the label's advance, under heavy A&R supervision; another may have delivered a finished master made on her own dime and licensed it in. The court concluded that resolving the work-for-hire defense would require separate factual adjudication for each artist and each recording, so common questions did not predominate; the validity of each artist's termination notice, which can turn on that artist's good faith and intent, added another individualized layer, and the proposed injunctive class failed the cohesiveness requirement for the same reasons. The termination right survives, but the efficient classwide vehicle for vindicating it does not. Artists are left to pursue their terminations individually or in smaller, factually cohesive groups.

## Open questions

- **Are featured-artist masters works made for hire at all?** The court declined to decide on the pleadings, and no appellate ruling squarely resolves it. The repeal of the 1999 amendment left the question deliberately unsettled.
- **How is "instance and expense" applied recording-by-recording?** The fact-intensive standard invites inconsistent outcomes depending on advances, studio control, and payment structure.
- **What is the fate of loan-out grants?** The ruling that corporate loan-out grants are not terminable may strand artists who, often on the advice of their own representatives, routed their deals through personal-service entities.

## Implications

- **For recording artists and heirs:** Termination of master recordings is viable but must usually be pursued individually; expect a fact fight over employment status and "instance and expense" rather than a clean statutory win.
- **For labels:** The work-for-hire defense remains available but is no longer a pleading-stage shield; its individualized nature is, paradoxically, both a litigation burden and a class-defeating advantage.
- **For artist representatives:** Loan-out structures that once optimized taxes can forfeit termination rights, because a grant by the artist's company is not a grant "by the author."
- **For the catalog economy:** As 35-year windows open on the recordings of the late 1970s and 1980s, the absence of a class mechanism slows recapture and preserves label leverage in renegotiations.

## Frequently asked questions

**Can a recording artist terminate the transfer of a master recording?**
Potentially yes, under § 203, if the artist personally executed the grant and the recording is not a work made for hire. Both conditions are contested and fact-specific, as *Waite* illustrates.

**Why did the court refuse to certify a class?**
Because both work-for-hire theories (the *Reid* employee factors and the "instance and expense" test for specially commissioned works) require an individualized inquiry into each artist's creative and financial arrangement, and the validity of each termination notice raised its own fact questions, so common issues did not predominate over individual ones.

**Why does a loan-out company matter?**
Section 203 permits termination only of grants "executed by the author." When an artist's loan-out corporation, rather than the artist personally, executed the transfer, the court held there is no author-executed grant to terminate.

## Authorities and sources

- [Waite v. UMG Recordings, Inc. (450 F. Supp. 3d 430) — UCLA Law PDF](https://law.ucla.edu/sites/default/files/PDFs/ITLP_General/Waite%20v.%20UMG%20Recordings,%20Inc.pdf)
- [Waite v. Universal Music Group — Loeb & Loeb (2020)](https://www.loeb.com/en/insights/publications/2020/04/waite--v-universal-music-group)
- [Waite v. UMG Recordings, Inc. — Loeb & Loeb (2023, class certification)](https://www.loeb.com/en/insights/publications/2023/02/waite-v-umg-recordings-inc)
- [New York Court Denies Class Certification — Inside Class Actions](https://www.insideclassactions.com/2023/02/07/new-york-court-denies-class-certification-in-copyright-infringement-action/)
- [Class certification opinion (excerpt), Jan. 27, 2023 — Loeb & Loeb PDF](https://www.loeb.com/-/media/files/pdfs/2023-pdfs/waite-order.pdf)
- [17 U.S.C. § 203, Termination of transfers and licenses granted by the author — Cornell LII](https://www.law.cornell.edu/uscode/text/17/203)