By, Don Jeffrey

Reprinted from Billboard Magazine (November 12, 1994); beginning page 12

NEW YORK-Following his victory before the U.S. Supreme Court earlier this year, rap mogul Luther Campbell has lost a different case in a lower court. A county judge in Miami has ordered him to pay more than $1.62 million in total damages to a rapper who accused Campbell of cheating him out of royalties.

Judge S. Peter Capua ruled that Campbell, owner of Luke Records, owes rapper M.C. Shy-D $699,165 in back royalties on two albums, "Gotta Be Tough" and "Comin’' Correct In '88," recorded in 1987 and 1988, respectively, on Campbell's Skyywalker Records label.

M.C. Shy-D, whose real name is Peter Jones, charged Campbell with breaching an agreement made in 1987 and with misrepresenting sales on the rapper's two albums and six singles.

The judge said in his 16-page opinion that the sales information provided by Campbell's label was "grossly inadequate," and that business records and computerized summaries of sales were ''missing.'' Judge Capua also said Campbell "knowingly" made "fraudulent and intentional misrepresentations."

Campbell's attorney, Nicolas Manzini of Manzini & Stevens, says that the decision has been appealed. "Luther Campbell absolutely did not rip this guy off," Manzini says. A former CBS Records executive called by M.C. Shy-D's lawyers as an "expert witness" concluded that the two albums each sold a minimum of 330,000 units. The singles sold a total of 110,247 units, according to Luke Records.

Using the songwriting and mechanical royalty rates set down in the 1987 agreement between Luke and M.C. Shy-D, the judge figured that the rapper was owed $798,265 in total royalties. But, he was paid only $99,100 by Luke, according to the court document. Thus, the judge ordered Luke to pay $699,165 in compensatory damages, $525,966 in interest charges, and $399,000 in punitive damages, for a total of $1.62 million (which does not include attorneys' fees, court costs, and additional interest charges if the damages are not paid promptly).

M.C. Shy-D's attorney, Steven Peretz of Kiuger Peretz Kaplan & Berlin, says, "the punitive damages were exceptional because the judge wanted to punish the wrong-doer, and to send a message to the industry to deal fairly with the artists." In his opinion, the Judge said Campbell testified that he had paid the rapper less than the gross royalties because expenses the artist had incurred were subtracted from the total. Manzini said in an interview: "[Campbell] overpaid Mr. Jones by a significant amount. Unfortunately, we discovered it too late to pull back the checks already given to him. We didn't deduct for expenses we were entitled to take under the controlling agreement."

But the judge ruled that these expenses (which included advertising and promotion, photography, studio time and engineering, travel, video production and promotion, and merchandising products) should be paid by the record company.

M.C. Shy-D instituted action against Campbell in 1990. Another of his attorneys, Richard Wolfe of Bedzow Korn & Kan, says, "He had a suspicion he wasn't getting everything he was owed. His royalty statements would show a negative balance while his records were on the Billboard chart."

The non-jury trial began in December 1992 and ended in April of this year. The opinion was handed down by Judge Capua (who has performed professionally as a drummer) in Dade County Circuit Court in Miami Oct.28. Manzini charges that Campbell was "deprived of a jury trial," and that the bench trial took too long.

Campbell burst into national prominence in 1990 as a free-speech advocate after the album "As Nasty As They Wanna Be" by his group 2 Live Crew became the center of a firestorm over recordings with sexually explicit lyrics. The album was banned in some U.S. counties, and the controversy led retail chains to adopt 18-to-buy policies.

The attorneys representing M.C. Shy-D also filed suit against Campbell over royalty payments on behalf of the two other members of 2 Live Crew. That case was settled out of court in 1992. Campbell was more recently in the news spotlight after the Nashville publishing company AcuffRose Music sued him for recording a parody of Roy Orbison's "Oh, Pretty Woman." Campbell took that case to the Supreme Court, which ruled March 7 that the parody was protected under the fair use provisions of copyright law.

MC Shy-D, a 28-year-old Atlanta resident, now has an album out on Wrap Records/Ichiban Records called "M.C. Shy-D The Comeback."