Summer Walker Can Use This Law to Break Her Record Deal. But There’s a $50 Million Catch.

Trending on Billboard Summer Walker’s dispute with Universal Music Group burst into public view last week, when the music giant sued her in Los Angeles court. But it really started in August, when she first notified the label that she was terminating her 2017 record contract. Or maybe it started way back in 1872, when California enacted strict time limits on labor contracts in the wake of the Civil War over concerns about involuntary servitude. Those rules evolved over the next 150 years (with a little help from a landmark ruling for Olivia DeHavilland) into the “seven-year rule,” which bars personal service contracts longer than — you guessed it. Related It was that rule (formally California Labor Code Section 2855) that Walker invoked in August to break her deal with UMG’s Interscope. Fuerza Regida is also currently citing it in a legal battle with its label Rancho Humilde, and H.E.R. sued her longtime record label for release from her contract under the seven-year rule back in 2022. In Walker’s case, she signed her recording contract with Interscope in 2017 and — we’ll wait while you do the math — more than seven years have since elapsed. So she’s free? It’s not that straightforward. While any other contract would simply be terminated after seven years, record deals are treated uniquely under the law. Thanks to a 1987 exemption lobbied for by the music industry, labels can sue artists who break their deals on the seven-year rule, demanding lost profits from any contractually required albums they failed to deliver. That’s what Interscope did last week. In its lawsuit against Walker, the label alleged she had only released three of her contract’s five-album commitment. And given that each of those prior albums reached No. 1 or No. 2 on the Billboard 200, Interscope says she owes a whopping $50 million in damages for failing to hand in the last two. The threat of that kind of costly lawsuit makes the seven-year rule far more difficult for musical artists to invoke than essentially any other worker in California: “Recording artists are the only people that get stuck in these deals,” says Dina LaPolt, a prominent artist attorney who has been an outspoken critic of the industry carveout. For record labels, that’s with good reason. Music deals have historically been built around a number of deliverable albums rather than a set length of time, and it’s hard to predict how long it will take for touring artists to produce new music. Labels say a hard time limit wouldn’t work for that structure and would force them to impose stricter delivery dates. The industry also argues that record companies spend lots of money on the front-end to develop and promote unheralded artists — to say nothing of literal advances — and that they would not risk that kind of investment if big artists could simply refuse to hold up their end of the deal on the back-end. “The truth is, after seven years, it’s mostly only going to be established artists who are still with the same record company,” says one highly placed record industry exec. “Those are the artists that benefit economically from being able to walk, taking away the very source of income that you depend on to invest in the new artists, where there’s much higher risk.” Related Experts tell Billboard that seven-year rule fights aren’t uncommon, but that they’re mostly fought behind closed doors rather than in open court like Walker’s case. The rule is a legal “hammer” that artists can leverage to demand renegotiations, one artist attorney says, but that the unique music carveout gives labels enough counter-leverage that artists rarely want to test their luck getting sued for damages. The last case that went deep into litigation came more than a decade ago, pitting Avenged Sevenfold, a chart-topping heavy metal band, against Warner Bros. Records. The label sued the band in 2016 after it bolted for Capitol Records by invoking the seven-year rule with one album left on its deal. That case almost went all the way trial before ending in a settlement that saw the band return to Warner for a final album in return for control over its earlier masters. For Howard King, the veteran music litigator who represented Avenged Sevenfold in that case, battles over the seven-year rule come down to forcing the label to really prove their value to the artist and the actual amount of money they would have lost rather than some eye-watering estimate. “If you’re the artist, you say ‘there’s no way the label can prove damages because it’s speculative and nobody can predict how a future record is going to perform’,” King says. “Of course, the label is going to say ‘you had four successful albums in a row and we have an expert who will testify that the fifth would have been equally successful.’” Artists and their advocates have urged California lawmakers to repeal the 1987 amendment many times. In 2001, superstar artists like Don Henley, Sheryl Crow and Courtney Love led a high-profile effort to rethink the provision, but it stalled out the next year. Related Recent legislation, called the Free Artists From Industry Restrictions (FAIR) Act, would have still required artists who terminate deals to repay 120 percent of advances for undelivered albums. Labels argued at the time that the bill would have “radically destabilized recording agreements and California’s entire music economy.” The measure failed to pass the California Senate’s Judiciary Committee in June 2022. Not all seven-year battles focus on the question of huge lost profits from undelivered albums. Fuerza Regida’s case, for instance, centers on whether the band voluntarily signed extensions that restarted the seven-year clock. Walker’s case, meanwhile, could turn on whether her earlier releases count as deliverables that satisfy her contract in the first place. She’s also suing her co-label for fraud, suggesting her dispute over the contract could have additional layers. But the eye-catching $50 million figure at the bottom of Interscope’s complaint is a reminder of the unique limits that Walker and other musical artists face when invoking the protections of the seven-year rule — limits that artist advocates have long argued are unfair. “These artists sign these things when they’re really young and have no money, and they often get a sh***y deal,” King says. “I think seven years of penance is enough.”