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Vivendi Universal's Universal Music Group will establish a settlement fund of approximately $4.75 million to pay royalties to as many as 300 artists and their heirs. The fund is the result of a lawsuit brought by torch singer Peggy Lee, who had accused the music giant of accounting improprieties reaching back as far as the 1940s.

UMG admitted no wrongdoing in agreeing to establish the fund. Preliminary settlement papers were signed January 16 by lawyers for both sides in a Los Angeles Superior Court. Judge Victoria Gerrard Chaney described the agreement as "reasonable and fair," according to an in-depth report in the Los Angeles Times. A final settlement is expected by May.

Judge Chaney officially declared Lee's complaint a class action suit on Monday, January 14, after opening the litigation to artists such as the Andrews Sisters, and to the heirs and estates of Louis Armstrong, Pearl Bailey, Patsy Cline, Ella Fitzgerald, Billie Holiday, and others—most of whom had recorded for the Decca label prior to 1962. Many older artists had been short-changed by agreeing to inadequate royalty terms for Compact Disc sales in the early 1980s, before CDs became the dominant recorded music format, their attorneys asserted. Vivendi Universal acquired Decca through a series of mergers and acquisitions.

Members of the class could collect as much as $50,000 each, according to Lee's attorney Cyrus V. Godfrey. Universal promised to set aside a fund of $700,000 immediately, and to make a concerted effort to locate deserving Decca artists, according to the label's lawyer Steve T. Kang. Other artists are pursuing individual lawsuits against UMG. Those who choose to do so would be excluded from the class action suit, Chaney warned. Country singer Loretta Lynn has her own suit against Decca, as do the estates of Bing Crosby and Buddy Holly.

Peggy Lee successfully sued Capitol Records in 1999, as did band leader Les Brown and the heirs of Dinah Shore and Benny Goodman. The 81-year-old Lee also won a 1991 suit against Walt Disney Company for royalties on videocassette sales and rentals of the animated classic Lady and the Tramp, for which she wrote some songs and performed the voices of several characters. Her award in that case was $3.83 million.

Godfrey said the action against UMG was the first class-action suit accusing a record company of questionable accounting procedures. Country stars the Dixie Chicks are wrangling with Sony Music over purported under-reporting of sales and over-billing for development and promotional expenses. Such lawsuits are part of a larger campaign by artists to change long-established industry practices that cut them out of what they claim are the profits they are due. The Recording Artists Coalition, headed by Courtney Love and former Eagles member Don Henley, is working hard to create more equitable contracts for musicians and to give them more control over their creations.