California has an interesting law on the books called the “7 Year Rule” that releases employees from a personal services contract, like a record deal, after 7 years. Th was actually part of a law that was enacted way back in 1872 as a way to protect the then burgeoning entertainment industry and helped to create the “studio system” that film studios used to employee actors for long periods of their careers. This all changed in 1940 when Gone With the Wind co-star Olivia de Havilland won a judgment from a state appeals court that her contract with Warner Brothers Pictures wasn’t binding past the seven-year mark, but now the law is being tested again.
Warner Music is taking Avenged Sevenfold to court over a relatively new provision in the 7 Year Rule. The band recently bolted to Capitol Records, and it’s new album The Stage just came out on Friday on that label. The problem is that in 1989 record labels successfully lobbied to add an amendment to the law that allowed them to sue an artist that left without delivering the number of albums originally agreed upon, which appears to be the case with Avenged Sevenfold. The labels argued that since many times they invest huge sums of money up front in an artist, there’s really no incentive for an artist to fulfill the contract if he can wait it out 7 years, hence the amendment.
The band wasn’t happy with the marketing strategy that Warners had used on its previous albums, even though two of them made it to #1, as well as the fact that many of the company’s main executives had left, which was behind their decision to find another label.
Lots of actors, artists, athletes, talent agents and record companies have invoked the 7 Year Rule in the past, but this is the first time it’s actually being tested in court. The big problem for Warners is trying to determine what the damages might be for not having the last album of the deal, which is why it’s looking closely at how well The Stage does in the marketplace. The band claims it doesn’t owe Warners another album due because it came to the end of its 7 year term. It now looks like sometime in 2017, a judge will decide.